iminy's Cricket Farm issued a 25-year, 10 percent semiannual bond 3 years ago. The bond cur ells for 93 percent of its face value. The book value of the debt issue is $45 million. In addition company has a second debt issue on the market, a zero coupon bond with 13 years left to mat he book value of this issue is $45 million and the bonds sell for 52 percent of par. The compar ax rate is 24 percent. a. What is the company's total book value of debt? Note: Do not round intermediate calculations and enter your answer in dollars, not mil of dollars, e.g., 1,234,567. b. What is the company's total market value of debt? Note: Do not round intermediate calculations and enter your answer in dollars, not mil of dollars, e.g., 1,234,567. c. What is your best estimate of the aftertax cost of debt? Note: Do not round intermediate calculations and enter your answer as a percent rour
iminy's Cricket Farm issued a 25-year, 10 percent semiannual bond 3 years ago. The bond cur ells for 93 percent of its face value. The book value of the debt issue is $45 million. In addition company has a second debt issue on the market, a zero coupon bond with 13 years left to mat he book value of this issue is $45 million and the bonds sell for 52 percent of par. The compar ax rate is 24 percent. a. What is the company's total book value of debt? Note: Do not round intermediate calculations and enter your answer in dollars, not mil of dollars, e.g., 1,234,567. b. What is the company's total market value of debt? Note: Do not round intermediate calculations and enter your answer in dollars, not mil of dollars, e.g., 1,234,567. c. What is your best estimate of the aftertax cost of debt? Note: Do not round intermediate calculations and enter your answer as a percent rour
Chapter6: Fixed-income Securities: Characteristics And Valuation
Section: Chapter Questions
Problem 17P
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