Peyton's Colt Farm issued a 30-year, 7.6 percent semiannual bond 8 years ago. The bond currently sells for 88.5 percent of its face value. The company's tax rate is 34 percent. The book value of the debt issue is $101 million. In addition, the company has a second debt issue, a zero coupon bond with 11 years left to maturity; the book value of this issue is $60 million, and it sells for 58.0 percent of par.
Requirement 1:
What is the total book value of debt?
Requirement 2:
What is the total market value of debt?
Requirement 3:
What is the aftertax cost of debt?