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Jiminy's Cricket Farm issued a 30-year, 7.4 percent semiannual bond 8 years ago. The bond currently sells for 91 percent of its face value. The book value of this debt issue is $96 million. In addition, the company has a second debt issue, a zero coupon bond with 11 years left to maturity; the book value of this issue is $66 million, and it sells for 55.5 percent of par. The company’s tax rate is 34 percent.

A) What is the total book value of debt?($) (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)

B) What is the total market value of debt?($) (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)

C) What is the aftertax cost of debt?(%) (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)

Financial Management, Finance

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  • Reference No.:- M92744251

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