Problem:
Jiminy's Cricket Farm issued a 30-year, 7.4 percent semiannual bond 6 years ago. The bond currently sells for 85 percent of its face value. The book value of this debt issue is $108 million. In addition, the company has a second debt issue, a zero coupon bond with 9 years left to maturity; the book value of this issue is $67 million, and it sells for 61.5 percent of par. The company's tax rate is 38 percent.
Requirement:
Question 1: What is the total book value of debt?
Question 2: What is the total market value of debt?
Question 3: What is the aftertax cost of debt?
Note: Please explain comprehensively and give step by step solution.