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Calculating Cost of Debt with explanation Please!!! Shanken Corp. issued a bond with a maturity of 20 years and a semiannual coupon rate of 10
Calculating Cost of Debt
with explanation Please!!!
Shanken Corp. issued a bond with a maturity of 20 years and a semiannual coupon rate of 10 percent 2 years ago. The bond currently sells for 93 percent of its face value. The book value of the debt issue is $50 million. In addition, the company has a second debt issue on the market, a zero coupon bond with 13 years left to maturity: the book value of this issue is $40 million and the bonds sell for 52 percent of par. The company's tax rate is 35 percent. What is the company's total book value of debt? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars (e.g., 1,234,567).) Total book value What is the company's total market value of debt? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars (e.g., 1,234,567).) Total market value What is your best estimate of the aftertax cost of debt? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).) Cost of debt %Step by Step Solution
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