What is avicorp cost of debt

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Reference no: EM131566360

Avicorp has a $10 million debt issue outstanding, with a 6% coupon rate. The debt has semi-annual coupons, the next coupon is due in 6 months, and the debt matures on 5 years. It is currently prices at 95% of its $1,000 face value. What is Avicorp’s cost of debt?

a) Avicorp’s cost of debt is 3.60% per 6 months or 7.34% per annum.

b) None of the other answers are true.

c) Avicorp’s cost of debt is 3% per 6 months or 6.09% per annum.

d) Avicorp’s cost of debt is 3.60% per quarter or 15.21% per annum.

Reference no: EM131566360

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