Question: For the firm in Problem 7, suppose the book value of the debt issue is $105 million. In addition, the company has a second debt

  • For the firm in Problem 7, suppose the book value of the debt issue is $105 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 $75 million, and it sells for 62.5 percent of par. What is the total book value of debt? The total market value? What is the aftertax cost of debt now?

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