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Olympic Sports has two issues of debt outstanding. One is a 9% coupon bond with a face vale of $32 million, a maturity of 15
Olympic Sports has two issues of debt outstanding. One is a 9% coupon bond with a face vale of $32 million, a maturity of 15 years, and a yield to maturity of 10%. The coupons are paid annually. The other bond issue has a maturity of 20 years, with coupons also paid annually, and a coupon rate of 10%. The face value of the issue is $37 million, and the issue sells for 92% of par value. The firm's tax rate is 35%. What is the before tax cost of debt for Olympic? What is the after tax cost of debt for Olympic?
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