Question
Avicorp has a $12.5 million debt issue? outstanding, with a 6.1% coupon rate. The debt has?...
Avicorp has a $12.5 million debt issue? outstanding, with a 6.1% 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 94% of par value.
a. What is? Avicorp's pre-tax cost of? debt? Note: Compute the effective annual return.
b. If Avicorp faces a40% tax? rate, what is its? after-tax cost of? debt?
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