Calculating the after-tax cost of debt

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Calculating Cost of Debt

Gauss Corporation issued 20-year Bonds bearing a 9% coupon, payments made semiannually, 7 years ago. The bonds currently sells for 108 percent of par value. The company’s tax rate is 38 percent. The Book Value of this issue is $50 million. The Company also issued $30 Million face (Book) value Zero coupon bonds which have nine years left to maturity.. The Zeros currently sell for 48%of face (par) value. What is the company’s total book value of debt? The total market value? What is your best estimate of Gauss’after-tax cost of debt?

*NOTE: I need help calculating the after-tax cost of debt

Reference no: EM131021533

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Calculating the after-tax cost of debt : Gauss Corporation issued 20-year Bonds bearing a 9% coupon, payments made semiannually, 7 years ago. The bonds currently sells for 108 percent of par value. The company’s tax rate is 38 percent. The Book Value of this issue is $50 million. calculatin..

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