What is your best estimate of the aftertax cost of debt

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Reference no: EM13938340

Jiminy's Cricket Farm issued a 30-year, 7 percent semi-annual bond 8 years ago. The bond currently sells for 87 percent of its face value. The book value of the debt issue is $25 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 8 years left to maturity; the book value of this issue is $76 million and the bonds sell for 80 percent of par.

What is your best estimate of the aftertax cost of debt?

Reference no: EM13938340

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