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Business, 03.01.2020 06:31 tolantyler365

jiminy’s cricket farm issued a bond with 10 years to maturity and a semiannual coupon rate of 6 percent 2 years ago. the bond currently sells for 95 percent of its face value. the company’s tax rate is 40 percent. the book value of the debt issue is $55 million. in addition, the company has a second debt issue on the market, a zero coupon bond with 15 years left to maturity; the book value of this issue is $30 million, and the bonds sell for 55 percent of par.

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

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