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Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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
Transcribed Image Text:**Jiminy's Cricket Farm Debt Analysis**
Jiminy's Cricket Farm issued a 25-year, 10 percent semiannual bond 3 years ago. The bond currently sells for 93 percent of its face value. 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 13 years left to maturity; the book value of this issue is $45 million and the bonds sell for 52 percent of par. The company’s tax rate is 24 percent.
### Questions:
a. What is the company’s total book value of debt?
**Note:** Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g., 1,234,567.
b. What is the company’s total market value of debt?
**Note:** Do not round intermediate calculations and 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?
**Note:** Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
### Calculation Table:
| | |
|--------|---------|
| a. Total book value | |
| b. Total market value | |
| c. Cost of debt | % |
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