7. Calculating Cost of Debt (LO3) Pearce's Cricket Farm issued a 30-year, 7% semiannual bond 3 years ago. The bond currently sells for 93% of its face value. The company's tax rate is 35%. Assume the par value of the bond is $1,000. a. What is the pre-tax cost of debt? b. What is the after-tax cost of debt? c. Which is more relevant, the pre-tax or the after-tax cost of debt? Why? 8. Calculating Cost of Debt (L03) For the firm in Page 556 Problem 7. suppose the book value of the debt issue is $60 million. In addition, the company has a second debt issue on the market, a zero coupon bond with 10 years left to maturity: the book value of this issue is $35 million and the bonds sell for 57% of par. What is the company's total book value of debt? The total market value? What is your best estimate of the after-tax cost of debt now?