Compute the effective annual return

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Stancorp has a $125 million debt issue outstanding, with a 5.8% coupon rate. The debt has semi-annual coupons. with the next coupon is due in six months. The debt matures in ?ve years. It is currently priced at 94% 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% lax rate. what is its a?er-tax cost of debt?

Reference no: EM131986852

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