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Please help Avicorp has a $14.5 million debt issue outstanding, with a 5.9% coupon rate. The debt has semi-annual coupons, the next coupon is due
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Avicorp has a $14.5 million debt issue outstanding, 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 95.25% of par value. a. What is Avicorp's pretax cost of debt? b. If Avicorp faces a 25% tax rate, what is its after-tax cost of debt? Note. Assume that the firm will always be able to utilize its full interest tax shield Step by Step Solution
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