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Avicorp has a 511.6 million debt issue outstanding, with a 5.8% coupon rate. The dobt has semi-annuil coupons, the next coupon in due in six
Avicorp has a 511.6 million debt issue outstanding, with a 5.8% coupon rate. The dobt has semi-annuil coupons, the next coupon in due in six months, and the debt maturos in five yeara. It i currently priced at 94% of par value. a. What is Avicorp's pre-tax cost ol debt? Note: Compuite the eflective annual return b. If Avicorp faces a 25\% tax rate, what is is afler-tax cost of debe? Note: Assume that the firm wit always be able to utitae its full interest tax shield
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