Jiminys Cricket Farm issued a bond with 20 years to maturity and a semiannual coupon...
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Accounting
Jiminys Cricket Farm issued a bond with 20 years to maturity and a semiannual coupon rate of 10 percent 4 years ago. The bond currently sells for 97 percent of its face value. The companys tax rate is 38 percent. The book value of the debt issue is $40 million. In addition, the company has a second debt issue on the market, a zero coupon bond with 11 years left to maturity; the book value of this issue is $40 million, and the bonds sell for 52 percent of par.
| What is the companys total book value of debt? (Enter your answer in dollars, not millions of dollars, e.g. 1,234,567.) |
| Total book value | $ |
| What is the companys total market value of debt? (Enter your answer in dollars, not millions of dollars, e.g. 1,234,567.) |
| Total market value | $ |
| What is your best estimate of the aftertax cost of debt? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
| Cost of debt | % |
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