Pearce's Cricket Farm issued a 15-year, 10% semiannual bond 4 years ago. The Bohd 2uneny company's tax rate is 38% Suppose the book value of the debt issue is $60 million In addition, the company has a second debt issue on the market, a zero coupon bond with 11 years left to maturity. the book value of this issue is $35 million and the bonds sel for 5% of par. Assume the par value of the bond is $1.000 What is the company's total book value of debt? (Enter the answer in dollars. Omit S sign in your response.) Total book value What is the company's total market value of debr? (Enter the answer in dollars. Omit S sign in your response.) Total market value What is your best estimate of the after-tax cost of debt? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places.) Cost of debt

Pearce's Cricket Farm issued a 15-year, 10% semiannual bond 4 years ago. The Bohd 2uneny company's tax rate is 38% Suppose the book value of the debt issue is $60 million In addition, the company has a second debt issue on the market, a zero coupon bond with 11 years left to maturity. the book value of this issue is $35 million and the bonds sel for 5% of par. Assume the par value of the bond is $1.000 What is the company's total book value of debt? (Enter the answer in dollars. Omit S sign in your response.) Total book value What is the company's total market value of debr? (Enter the answer in dollars. Omit S sign in your response.) Total market value What is your best estimate of the after-tax cost of debt? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places.) Cost of debt

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 17P

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