Jiminy's Cricket Farm issued a 30-year, 7.2 percent semiannual bond 5 years ago. The bond currently sells for 89.5 percent of its face value. The book value of this debt issue is $99 million. In addition, the company has a second debt issue, a zero coupon bond with 8 years left to maturity; the book value of this issue is $69 million, and it sells for 57 percent of par. The companyâs tax rate is 40 percent.
Requirement 1: 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 $
Requirement 2: 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 $
Requirement 3: What is the aftertax 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 %
Jiminy's Cricket Farm issued a 30-year, 7.2 percent semiannual bond 5 years ago. The bond currently sells for 89.5 percent of its face value. The book value of this debt issue is $99 million. In addition, the company has a second debt issue, a zero coupon bond with 8 years left to maturity; the book value of this issue is $69 million, and it sells for 57 percent of par. The companyâs tax rate is 40 percent.
| Requirement 1: |
| 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 | $ |
| Requirement 2: |
| 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 | $ |
| Requirement 3: |
| What is the aftertax 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 | % |
