Question
Shanken Corp. issued a bond with a maturity of 10 years and a semiannual coupon rate of 6 percent 2 years ago. The bond currently
Shanken Corp. issued a bond with a maturity of 10 years and a semiannual coupon rate of 6 percent 2 years ago. The bond currently sells for 95 percent of its face value. The book value of the debt issue is $55 million. In addition, the company has a second debt issue on the market, a zero coupon bond with 15 years left to maturity; the book value of this issue is $30 million and the bonds sell for 55 percent of par. The companys tax rate is 40 percent. |
What is the companys total book value of debt? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars (e.g., 1,234,567).) |
Total book value | $ |
What is the companys total market value of debt? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars (e.g., 1,234,567).) |
Total market value | $ |
What is your best estimate of the aftertax cost of debt? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).) |
Cost of debt | % |
rev: 05_15_2017_QC_CS-89457
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