Jiminy’s Cricket Farm issued a bond with 16 years to maturity and a semiannual coupon rate...

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Jiminy’s Cricket Farm issued a bond with 16 years to maturityand a semiannual coupon rate of 6 percent 2 years ago. The bondcurrently sells for 91 percent of its face value. The company’s taxrate is 38 percent. The book value of the debt issue is $40million. In addition, the company has a second debt issue on themarket, a zero coupon bond with 11 years left to maturity; the bookvalue of this issue is $30 million, and the bonds sell for 50percent of par.
a. What is the company’s total book value of debt?
b. What is the company’s total market value of debt?
c. What is your best estimate of the aftertax cost of debt?

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Jiminy’s Cricket Farm issued a bond with 16 years to maturityand a semiannual coupon rate of 6 percent 2 years ago. The bondcurrently sells for 91 percent of its face value. The company’s taxrate is 38 percent. The book value of the debt issue is $40million. In addition, the company has a second debt issue on themarket, a zero coupon bond with 11 years left to maturity; the bookvalue of this issue is $30 million, and the bonds sell for 50percent of par.a. What is the company’s total book value of debt?b. What is the company’s total market value of debt?c. What is your best estimate of the aftertax cost of debt?