Olympic sports has two issues of debt outstanding

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Reference no: EM131842401

Olympic Sports has two issues of debt outstanding. One is an 4% coupon bond with a face value of $34 million, a maturity of 15 years, and a yield to maturity of 5%. The coupons are paid annually. The other bond issue has a maturity of 20 years, with coupons also paid annually, and a coupon rate of 5%. The face value of the issue is $39 million, and the issue sells for 93% of par value. The firm's tax rate is 20%. a. What is the before-tax cost of debt for Olympic? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Reference no: EM131842401

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