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Herera Motors issued 30-year, 7 percent semiannual...




Herera Motors issued 30-year, 7 percent semiannual bond 7 years ago. The bond currently sells for 95 percent of its face value. The company's tax rate is 38 percent. Suppose the book value of the debt issue is $90 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 $60 million, and it sells for 54 percent of par. What is the total book value of debt, the total market value and the current aftertax cost?


Paper#7188 | Written in 18-Jul-2015

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