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Help and explanation for A and B Avicorp has a $10.9 million debt issue outstanding. with a 5.8% coupon rate. The debt has semi-annual coupons.

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Help and explanation for A and B

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Avicorp has a $10.9 million debt issue outstanding. with a 5.8% coupon rate. The debt has semi-annual coupons. the next coupon is due in six months, and the debt matures in ve years. It is currently priced at 94% of par value. a. What is Avieorp's pretex east of debt'? Note: Compute the effective annual return. b. lfAvicorp faces a 40% tax rate, what is its after-tax cost of debt? Note: Assume that the rm will always be able to utilize its full interest tax shield

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