Estimate of the aftertax cost of debt


Jiminy's Cricket Farm issued a 30-year, 9 percent semiannual bond 6 years ago. The bond currently sells for 108 percent of its face value. The book value of the debt issue is $18 million. The company's tax rate is 34 percent.

In addition, the company has a second debt issue on the market, a zero coupon bond with 6 years left to maturity; the book value of this issue is $76 million, and the bonds sell for 75 percent of par.

The company's total book value of debt is $. Its total market value of debt is $. (Enter your answers in dollars, not millions of dollars, e.g, $1,234,567.) Your best estimate of the aftertax cost of debt is percent. (Do not include the percent sign (%). Round your answer to 2 decimal places.

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Accounting Basics: Estimate of the aftertax cost of debt
Reference No:- TGS065250

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