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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?
Calculating Total Cash Flows Schwert Corp. shows the following information on its 2012 income statement: sales = $185,000; costs = $98,000; other expenses = $6,700.
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What is the net present value of this project if the relevant discount rate is 14 percent and the tax rate is 35 percent? Round your answer to the nearest dollar.
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