Jiminyrsquos cricket farm issued a bond with 15 years to


Jiminy’s Cricket Farm issued a bond with 15 years to maturity and a semiannual coupon rate of 6 percent 2 years ago. The bond currently sells for 95 percent of its par value. The company’s tax rate is 40 percent. 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 15 years left to maturity; the book value of this issue is $35 million, and the bonds sell for 51 percent of par. The par value of both bonds is $1,000. What is the after-tax cost of the first bond? What is the after-tax cost of the second (zero-coupon) bond? What is the firm's cost of debt?

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Financial Management: Jiminyrsquos cricket farm issued a bond with 15 years to
Reference No:- TGS01412288

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