Jiminy’s Cricket Farm issued a bond with 30 years to maturity and a semiannual coupon rate...

50.1K

Verified Solution

Question

Finance

Jiminy’s Cricket Farm issued a bond with 30 years to maturityand a semiannual coupon rate of 4 percent 2 years ago. The bondcurrently sells for 107 percent of its face value. The company’stax rate is 21 percent. The book value of the debt issue is $60million. In addition, the company has a second debt issue on themarket, a zero coupon bond with 10 years left to maturity; the bookvalue of this issue is $35 million, and the bonds sell for 76percent of par.
a.
What is the company’s total book value of debt? (Enteryour answer in dollars, not millions of dollars, e.g.1,234,567.)
b. What is the company’s total market value of debt?(Enter your answer in dollars, not millions of dollars,e.g. 1,234,567.)
c. What is your best estimate of the aftertax cost of debt?

Answer & Explanation Solved by verified expert

4.0 Ratings (845 Votes)

See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

Jiminy’s Cricket Farm issued a bond with 30 years to maturityand a semiannual coupon rate of 4 percent 2 years ago. The bondcurrently sells for 107 percent of its face value. The company’stax rate is 21 percent. The book value of the debt issue is $60million. In addition, the company has a second debt issue on themarket, a zero coupon bond with 10 years left to maturity; the bookvalue of this issue is $35 million, and the bonds sell for 76percent of par.a.What is the company’s total book value of debt? (Enteryour answer in dollars, not millions of dollars, e.g.1,234,567.)b.What is the company’s total market value of debt?(Enter your answer in dollars, not millions of dollars,e.g. 1,234,567.)c.What is your best estimate of the aftertax cost of debt?

a.	What is the company’s total book value of debt? (Enteryour answer in dollars, not millions of dollars, e.g.1,234,567.)
b.	What is the company’s total market value of debt?(Enter your answer in dollars, not millions of dollars,e.g. 1,234,567.)
c.	What is your best estimate of the aftertax cost of debt?