# Question: Peyton s Colt Farm issued a 30 year 7 4 percent semiannual bond

Peyton’s Colt Farm issued a 30-year, 7.4 percent semiannual bond 7 years ago. The bond currently sells for 89.0 percent of its face value. The company’s tax rate is 35 percent. The book value of the debt issue is \$100 million. In addition, the company has a second debt issue, a zero coupon bond with 10 years left to maturity; the book value of this issue is \$59 million, and it sells for 57.5 percent of par.
Requirement 1:
What is the total book value of debt? (Do not include the dollar sign (\$). Enter your answer in dollars, not millions of dollars (e.g., 1,234,567).)
Total book value of debt \$ ______________
Requirement 2:
What is the total market value of debt? (Do not include the dollar sign (\$). Enter your answer in dollars, not millions of dollars (e.g., 1,234,567).)
Total market value \$ _______________
Requirement 3:
What is the after tax cost of debt? (Do not include the percent sign (%). Round your answer to 2 decimal places (e.g., 32.16).)
After tax cost of debt % _____________

\$1.99
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