Effective annual return-what is its after-tax cost of debt

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Reference no: EM131346132

Avicorp has a $ 14.6$14.6 million debt issue outstanding, with a 5.9 %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 93 %, 93% of par value. a. What is Avicorp's pre-tax cost of debt? Note: Compute the effective annual return. b. If Avicorp faces a 40 %, 40% tax rate, what is its after-tax cost of debt?

Reference no: EM131346132

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