As of July 2009, Google(Ticker GOOG) had no debt. Suppose the firm were to issue 96 billion in zero-coupon senior debt, and another 16 billion in zero-coupon debt both due in January 2011. Suppose Google had 320 million shares outstanding trading at 422.27 per share, implying a market value of 135.1 billion. The risk-free rate over this horizon is 1.0% to determine the rate Google would pay on the junior debt issue (assume perfect capital markets).

Data table

273.6

264.5

228.9

186.5

162.8

148.2

133.9

120.5

114.1

107.9

95.8

85.1

74.6

61.8