Question

You are given the following information for a company: EBIT = $4,500,000 30- year maturity, 3,000 annual coupon bonds (number of bonds = 3000) with a coupon rate of 10% and a current market value of $2000 per bond. 20-year maturity, 2,000 semi-annual coupon bonds with a coupon rate of 8%, traded at 100% of their principal value. Tax rate = 0.21 Cost of unlevered equity RU= 20% The bond par value for this firm is $1,000 per bond, regardless of maturity Assuming that there is no cost of financial distress. If the firm wants to maintain a cost of levered equity of 20%, what is the value of debt it should have on its capital structure?

          You are given the following information for a company: 
EBIT = $4,500,000
30- year maturity, 3,000 annual coupon bonds (number of bonds = 3000) with a coupon rate of 10% and a current market value of $2000 per bond. 
20-year maturity, 2,000 semi-annual coupon bonds with a coupon rate of 8%, traded at 100% of their principal value. 
Tax rate = 0.21
Cost of unlevered equity RU= 20%
The bond par value for this firm is $1,000 per bond, regardless of maturity
Assuming that there is no cost of financial distress. If the firm wants to maintain a cost of levered equity of 20%, what is the value of debt it should have on its capital structure?

Added by Andrew C.

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