Avicorp has a $12.9 million debt issueoutstanding, with a 6.1% coupon rate. The debt hassemi-annual coupons, the
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Question:
Avicorp has a $12.9 million debt issueoutstanding, with a 6.1% coupon rate. The debt hassemi-annual coupons, the next coupon is due in sixmonths, and the debt matures in five years. It is currently priced at 93% of par value.
a. What isAvicorp's pre-tax cost ofdebt? Note: Compute the effective annual return.
b. If Avicorp faces a 40 %
40% taxrate, what is itsafter-tax cost ofdebt?
a. The cost of debt is ??? (Round to four decimalplaces.)
b. If Avicorp faces a 40 %???(Round to four decimalplaces.)
I need an answer within 15 mins!
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