Bennington industrial machines issued 154000 zero coupon


Bennington Industrial Machines issued 154,000 zero coupon bonds seven years ago. The bonds originally had 30 years to maturity with a yield to maturity of 7.4 percent. Interest rates have recently increased, and the bonds now have a yield to maturity of 8.5 percent. What is the price of the bonds? What is the market value of the company's debt? If the company has a $46.9 million market value of equity, what weight should it use for debt when calculating the cost of capital?

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Financial Management: Bennington industrial machines issued 154000 zero coupon
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