Question
Avicorp has a $13.2 million debt issue outstanding, with a 6.2% coupon rate. The debt has semiannual coupons, the next coupon is due in six
Avicorp has a $13.2 million debt issue outstanding, with a 6.2% coupon rate. The debt has semiannual 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 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?
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Internal Auditing Assurance And Advisory Services
Authors: Kurt R. Reding, Paul J. Sobel, Urton L. Anderson, Michael J. Head, Sridhar Ramamoorti, Mark Salamasick, Cris Riddle
3rd Edition
0894137409, 978-0894137402
