Esteban Sanford
28 Nov 2020

Jiminy's Cricket Farm issued a 30-year, 7 percent semiannual bond 6 years ago. The bond currently sells for 90 percent of its face value. The book value of this debt issue is $98 million. In addition, the company has a second debt issue, a zero coupon bond with 9 years left to maturity; the book value of this issue is $68 million, and it sells for 56.5 percent of par. The company’s tax rate is 38 percent.

Required

What is the 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 of debt $

What is the 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 the after-tax cost of the 7 percent coupon bond? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

  Aftertax cost of debt %

What is the after-tax cost of the zero-coupon bond? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

  Aftertax cost of debt %

What is the after-tax cost of debt? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

  Aftertax cost of debt %

1 answer·1 watching·68 views
 Tshego Monchusi
Tshego Monchusi
23 Jan 2021

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