A firm has two classes of securities: long-term bonds and common stock. The bonds have 16 years to maturity, a coupon rate of 7%, semi-annual coupon payments, ayield-to-maturity of 8.5%, and $277 million of total par value. The stock has 53 million shares outstanding and a current market price of $28. When computing the WACC, what weight should the firm assign to its cost of debt? Enter your answer as a decimal and stíow two decimal places. Type your answer...
A firm has two classes of securities: long-term bonds and common stock. The bonds have 16 years to maturity, a coupon rate of 7%, semi-annual coupon payments, ayield-to-maturity of 8.5%, and $277 million of total par value. The stock has 53 million shares outstanding and a current market price of $28. When computing the WACC, what weight should the firm assign to its cost of debt? Enter your answer as a decimal and stíow two decimal places. Type your answer...
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:A firm has two classes of securities; long-term bonds and common stock. The bonds have 16 years to maturity, a coupon rate of 7%, semi-annual coupon payments,
a yield-to-maturity of 8.5%, and $277 million of total par value. The stock has 53 million shares outstanding and a current market price of $28. When computing
the WACC, what weight should the firm assign to its cost of debt? Enter your answer as a decimal and show two decimal places.
Type your answer....
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