Question
Avicorp has just issued some five-year bonds, with a 6% coupon rate. The debt has semi-annual coupons, the next coupon is due in six months,
Avicorp has just issued some five-year bonds, with a 6% coupon rate. The debt has semi-annual coupons, the next coupon is due in six months, and the face value is $1000. It is currently priced at 95% of par value.
What is Avicorps pre-tax cost of debt (expressed in APR)? (answer not 7.2088)
If Avicorp faces a 40% tax rate, what is its after-tax cost of debt? (answer not 4.2000)
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Accounting What the Numbers Mean
Authors: David H. Marshall, Wayne W. McManus, Daniel F. Viele,
9th Edition
978-0-07-76261, 0-07-762611-7, 9780078025297, 978-0073527062
