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Jiminy's Cricket Farm issued a 20-year, 5.4 percent semiannual bond 3 years ago. The bond currently sells for 105 percent of its face value. The
Jiminy's Cricket Farm issued a 20-year, 5.4 percent semiannual bond 3 years ago. The bond currently sells for 105 percent of its face value. The book value of the debt issue is $45 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 50 percent of par. The company's tax rate is 24 percent
a. What is the company's total book value of debt? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g. 1,234,567.)
b. What is the company's total market value of debt? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)
c. What is your best estimate of the aftertax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
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