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Calculating cost of debt

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Calculating Cost of Debt

For the firm in Problem 7, suppose the book value of the debt issue is $20 million. In addition, the company has a second debt issue on the market, a zero coupon bond with seven years left to maturity; the book value of this issue is $70 million and the bonds sell for 61 percent of par. What is the company's total book value of debt? The total market value? Whatis your best estimate of the aftertax cost of debt now?

Reference no: EM133119380

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