Input area:
Bond maturity Book value Price YTM
3/1/2019 920,000,000$ 94.347 2.028%
3/1/2021 1,380,000,000$ 92.625 2.754%
BV of debt 2,300,000,000$
BV of equity per share 10.190$
Output area:
2)
RE from CAPM 9.86%
3)
Book value
Percent
of total
Quoted
price
Market value
Percent
of total
Yield to
Maturity
Book
values
Market
values
3/1/2019
$ 920,000,000 0.40 94.347 $ 867,992,400 0.40 2.028% 0.81% 0.82%
3/1/2021
1,380,000,000 0.60 92.625 1,278,225,000 0.60 2.754% 1.65% 1.64%
Total 2,300,000,000$ 1.00 2,146,217,400$ 1.00 2.46% 2.46%
Chapter 12
The Cost of Capital for Layton Motors