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Peyton?s Colt Farm issued a 30-year, 7.4 percent...

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Question

Peyton?s Colt Farm issued a 30-year, 7.4 percent semiannual bond 7 years ago. The bond currently sells for 89.0 percent of its face value. The company?s tax rate is 35 percent. The book value of the debt issue is $100 million. In addition, the company has a second debt issue, a zero coupon bond with 10 years left to maturity; the book value of this issue is $59 million, and it sells for 57.5 percent of par. Requirement 1: What is the total book value of debt? (Do not include the dollar sign ($). Enter your answer in dollars, not millions of dollars (e.g., 1,234,567).) Total book value of debt $ ______________ Requirement 2: What is the total market value of debt? (Do not include the dollar sign ($). Enter your answer in dollars, not millions of dollars (e.g., 1,234,567).) Total market value $ _______________ Requirement 3: What is the aftertax cost of debt? (Do not include the percent sign (%). Round your answer to 2 decimal places (e.g., 32.16).) Aftertax cost of debt % _____________

 

Paper#5573 | Written in 18-Jul-2015

Price : $25
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