Jiminy’s Cricket Farm issued a bond with 25 years to maturity and a semi-annual coupon rate of 10 percent 4 years ago. The bond currently sells for 97 percent of its face value and has a yield to maturity of 10.35%. The book value of the debt issue is $45 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 $45 million, the bonds sell for 53 percent of par, and their yield to maturity is 5.86%.
What is the company’s total book value of debt? (Enter your answer in dollars, not millions of dollars, e.g. 1,234,567.)
Total book value _$
What is the company’s total market value of debt? (Enter your answer in dollars, not millions of dollars, e.g. 1,234,567.)
Total market value _$
The company’s marginal tax rate is 38 percent. What is the after-tax cost of debt? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Cost of debt _%