Jiminys cricket farm issued a 30-year 7 percent semi-annual, Ask an Expert

Management Studies

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 after tax cost of debt?

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Business Management, Management Studies

Category:- Business Management
Reference No.:- M91677129

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