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What is after-tax cost of? debt

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Avicorp has a $10.9 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 a 40% tax? rate, what is its? after-tax cost of? debt?

?Note: Assume that the firm will always be able to utilize its full interest tax shield.

Reference no: EM132678957

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