Question
Avicorp has a $10.4 million debt issue outstanding, with a 6.1% coupon rate. The debt has semi-annual coupons, the next coupon is due in six
Avicorp has a $10.4 million debt issue outstanding, with a 6.1% coupon rate. The debt has semi-annual coupons, the next coupon is due in six months, and the debt matures in five years. It is currently priced at 93% of par value
a. What is Avicorp's pre-tax cost of debt? Note: Compute the effective annual return.
b. If Avicorp faces a 40% tax rate, what is its after-tax cost of debt?
*MAKE SURE TO ROUND TO FOUR DECIMAL PLACES IN EACH ANSWER*
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Multinational Finance
Authors: Kirt Butler
2nd Edition
0324004508, 978-0324004502
