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What is the answer to part C? The answer written is incorrect. Thank you. iminy's Cricket Farm issued a bond with 20 years to maturity
What is the answer to part C? The answer written is incorrect. Thank you.
iminy's Cricket Farm issued a bond with 20 years to maturity and a semiannual coupon rate of 6 percent 3 years ago. The bond currently sells for 103 percent of its face value. The company's tax rate is 22 percent. The book value of the debt issue is $60 million. In addition, the company has a second debt issue on the market, a zero coupon bond with 9 years left to maturity, the book value of this issue is $25 million, and the bonds sell for 4 percent of par. a. What is the company's total book value of debt? (Enter your answer in dollars, not b. What is the company's total market value of debt? (Enter your answer in dollars, not c. What is your best estimate of the aftertax cost of debt? (Do not round intermediate millions of dollars, e.g. 1,234,567.) millions of dollars, e.g.1,234,567.) calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Total book value b. Total market value c. Cost of debt 85,000,000 77,800,000 4.461 %Step by Step Solution
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