1. Pearces Cricket Farm issued a 30-year, 8% semi-annual bond 3 years ago. The bond currently sells for 93% of its face value. The companys tax rate is 35%.

Suppose 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 $50 million, and the bonds sell for 54% of par. Assume the par value of the bond is $1,000.

What is the companys total book value of debt?

Total book value ?

What is the companys total market value of debt?

Total market value ?

What is your best estimate of the after-tax cost of debt?