(Answered) What is the total book value of debt

Finance

Problem: Shanken Corp.. issued a bond with a maturity of 10 years and a semiannual coupon rate of 10 percent 4 years ago. The bond currently sells for 94 percent of its face value. The book value of the debt issue is $55 million. In addition, the company has a second debt issue on the market, a zero coupon bond with 14 years left to maturity; the book value of this issue is $30 million and the bonds sell for 55 percent of par. The company's tax rate is 38 percent.

Required:

Question 1: What is the total book value of debt?

Question 2: What is the company's total market value of debt?

Question 3: What is your best estimate of the aftertax cost of debt?

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