Jiminys Cricket Farm issued a bond with 30 years to maturity and a semiannual coupon...
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Accounting
Jiminys Cricket Farm issued a bond with 30 years to maturity and a semiannual coupon rate of 7 percent 6 years ago. The bond currently sells for 96 percent of its face value. The companys tax rate is 25 percent. The book value of the debt issue is $60 million. In addition, the company has a second debt issue on the market, a zero coupon bond with 9 years left to maturity; the book value of this issue is $35 million, and the bonds sell for 73 percent of par.
What is the after-tax cost of debt?
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