Shanken Corp. issued a 30-year, 9 percent semiannual bond 3 years ago. The bond currently sells for 106 percent of its face value. The company%u2019s tax rate is 34 percent. The book value of the debt issue is $24 million. In addition, the company has a second debt issue on the market, a zero coupon bond with three years left to maturity; the book value of this issue is $76 million and the bonds sell for 78 percent of par.
1) What is the company total book value of debt?
2) Calculate the total market value.
3) What is your best estimate of the aftertax cost of debt?