Question
Jiminys Cricket Farm issued a 30-year, 5 percent semiannual coupon bond 6 years ago. The bond currently sells for 106 percent of its face value.
Jiminys Cricket Farm issued a 30-year, 5 percent semiannual coupon bond 6 years ago. The bond currently sells for 106 percent of its face value. The companys tax rate is 25 percent. The book value of the debt issue is $55 million. In addition, the company has a second debt issue, a zero coupon bond with 10 years left to maturity; the book value of this issue is $45 million, and the bonds sell for 73 percent of par. a. What is the companys total book value of debt? (Enter your answer in dollars, not millions of dollars, e.g. 1,234,567.) b. What is the companys total market value of debt? (Enter your answer in dollars, not millions of dollars, e.g. 1,234,567.) c. What is 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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