Shanken Corp. issued a 30 -year, 6 percent semiannual bond 4 years ago. The bond currently...

Shanken Corp. issued a 30 -year, 6 percent semiannual bond 4 years ago. The bond currently sells 95 percent of its face value. The book value of the debt issue $45 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 50 million and the bonds sell 54 percent of par. The company's tax rate is 40 percent. What is the company's total book value of debt? What is the company's total market value of debt? What is your best estimate of the aftertax cost of debt?

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jeff jeffy answered 3 months ago

Shanken Corp. issued a 30-year, 10 percent semiannual bond 4 years ago. The bond currently sells...

Shanken Corp. issued a 30-year, 10 percent semiannual bond 4 years ago. The bond currently sells for 94 percent of its face value. The book value of the debt issue is $50 million. In addition, the company has a second debt issue on the market, a zero coupon bond with 14 years left to maturity; the book value of this issue is $50 million and the bonds sell for 54 percent of par. The company’s tax rate is 38 percent....

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