What is the company total book value of debt

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Question - Pearce's Cricket Farm issued a 15-year, 10% semiannual bond 4 years ago. The bond currently sells for 91% of its face value. The company's tax rate is 38%. Suppose the book value of the debt issue is $60 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 $35 million and the bonds sell for 51% of par. Assume the par value of the bond is $1,000.

Required -

1. What is the company's total book value of debt?

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

3. What is your best estimate of the after-tax cost of debt?

Reference no: EM133061793

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