Welcome to Westonci.ca, where you can find answers to all your questions from a community of experienced professionals. Get the answers you need quickly and accurately from a dedicated community of experts on our Q&A platform. Connect with a community of professionals ready to help you find accurate solutions to your questions quickly and efficiently.
Sagot :
Answer: See explanation
Explanation:
a. The company's total book value of debt will be:
= Value of debt + Value of zero coupon bonds
= $70 million + $100 million
= $170 million
b. The market value will be:
= Quoted price × Par value
= ($70 × 1.08) + ($100 × 0.61)
= $75.6 + $61
= $136.6 million
c. The aftertax cost of debt will be:
= (1 - Tax rate) × Pre tax cost of debt
= (1 - 35%) × 5.7%
= 65% × 5.7%
= 3.7%
We hope our answers were useful. Return anytime for more information and answers to any other questions you have. We appreciate your time. Please revisit us for more reliable answers to any questions you may have. Your questions are important to us at Westonci.ca. Visit again for expert answers and reliable information.
