question archive Jiminy's Cricket Farm issued a 30-year, 6
Jiminy's Cricket Farm issued a 30-year, 6
Subject:FinancePrice:2.86 Bought3
Jiminy's Cricket Farm issued a 30-year, 6.3 percent semiannual bond eight years ago. The bond currently sells for 110 percent of its face value. The book value of the debt issue is $135 million. In addition, the company has a second debt issue, a zero coupon bond with 12 years left to maturity; the book value of this issue is $65 million, and it sells for 64.3 percent of par. The company's tax rate is 22 percent.
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Market value of debt= [(135 × 110%) + (65 × 64.3%) × 106]
= $190,295,000
