Jiminys Cricket Farm issued a bond with 30 years to maturity and a semiannual coupon rate of
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Question:
Jiminy’s Cricket Farm issued a bond with 30 years to maturity and a semiannual coupon rate of 5 percent 6 years ago. The bond currently sells for 106 percent of its face value. The company’s tax rate is 25 percent. The book value of the debt issue is $45 million. In addition, the company has a second debt issue on the market, a zero coupon bond with 10 years left to maturity; the book value of this issue is $45 million, and the bonds sell for 73 percent of par. |
What is the company's total book value of debt? |
multiple choice 1
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What is the company's total market value of debt? |
multiple choice 2
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What is your best estimate of the aftertax cost of debt? |
multiple choice 3
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Related Book For
Fundamentals of Corporate Finance
ISBN: 978-1260153590
12th edition
Authors: Stephen M. Ross, Randolph W Westerfield, Robert R. Dockson, Bradford D Jordan
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