Jiminy’s Cricket Farm issued a bond with 30 years to maturity and a semiannual coupon rate of 5 percent 6 years ago. The bond currently sells for 106 percent of its face value. The company’s tax rate is 25 percent. 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 10 years left to maturity; the book value of this issue is $45 million, and the bonds sell for 73 percent of par.

     

What is the company's total book value of debt?

multiple choice 1

• $90,000,000

• $85,500,000

• $94,500,000

• $81,000,000

  

What is the company's total market value of debt?

multiple choice 2

• $80,550,000

• $84,577,500

• $88,605,000

• $81,000,000

  

What is your best estimate of the aftertax cost of debt?

multiple choice 3

• 3.01%

• 3.17%

• 2.38%

• 3.16%

• 3.31%