Question: For the firm in Problem, suppose the book value of the debt issue is $60 million. In addition, the company has a second debt issue,

For the firm in Problem, suppose the book value of the debt issue is $60 million. In addition, the company has a second debt issue, a zero coupon bond with 20 years left to maturity; the book value of this issue is $70 million, and it sells for 26.5 percent of par. What is the total book value of debt? The total market value? What is the after cost of debt now?

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The book value of debt is the total par value of all outstanding debt so BV D 60000000 70000000 ... View full answer

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