Jiminys cricket farm issued a 30-year 7 percent semi-annual


Jiminy's Cricket Farm issued a 30-year, 7 percent semi-annual bond 5 years ago. The bond currently sells for 81 percent of its face value. The book value of the debt issue is $23 million. The company's tax rate is 33 percent. In addition, the company has a second debt issue on the market, a zero coupon bond with 5 years left to maturity; the book value of this issue is $78 million and the bonds sell for 74 percent of par. Required: (a) What is the company's total book value of debt? b) Company’s total market value of debt? c) Your best estimate of aftertax cost of debt?

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Financial Management: Jiminys cricket farm issued a 30-year 7 percent semi-annual
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