Question
Stancorp has a $ 14.9 million debt issue outstanding, with a 6.1 % coupon rate. The debt has semi-annual coupons, with the next coupon is
Stancorp has a $ 14.9 million debt issue outstanding, with a 6.1 % coupon rate. The debt has semi-annual coupons, with the next coupon is due in six months. The debt matures in five years. It is currently priced at 93 % of par value.
a. What is Stancorp's pre-tax cost of debt? Note: Compute the effective annual return.
b. If Stancorp faces a 30 % tax rate, what is its after-tax cost of debt?
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International Finance Discussion Papers The Information Content Of High Frequency Data For Estimating Equity Return Models And Forecasting Risk
Authors: United States Federal Reserve Board, Dobrislav P. Dobrev, Pawel J. Szerszen
1st Edition
1288724810, 9781288724819
