Question
Jiminy's Cricket Farm issued a 30-year, 7 percent semi-annual bond 3 years ago. The bond currently sells for 87 percent of its face value. The
Jiminy's Cricket Farm issued a 30-year, 7 percent semi-annual bond 3 years ago. The bond currently sells for 87 percent of its face value. The book value of the debt issue is $23 million. The company's tax rate is 32 percent. In addition, the company has a second debt issue on the market, a zero coupon bond with 3 years left to maturity; the book value of this issue is $81 million and the bonds sell for 75 percent of par. Required:
(a) What is the company's total book value of debt? (Do not round your intermediate calculations.)
i got 104000000
(b) What is the company's total market value of debt? (Do not round your intermediate calculations.)
i got 80760000
(c) What is your best estimate of the aftertax cost of debt?
the options are 4.71%, 6.41%, 6.84%, 6.09% 7.18% (i do not know how to get this
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