Avicorp has a $13.9 million debt issueoutstanding, with a 5.9% coupon rate. The debt has semi-annual coupons,
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Avicorp has a $13.9 million debt issueoutstanding, with a 5.9% 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 EAR
B) If Avicorp faces a 40% tax rate, what is its after-tax cost of debt?
40% taxrate, what is itsafter-tax cost ofdebt?
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