What is avicorp pre-tax cost of debt

Reference no: EM131940016

Question: Avicorp has a $10.8 million debt issue outstanding, with a 6.2% 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 96% of par value.

a. What is Avicorp's pre-tax cost of debt?

b. If Avicorp faces a 40% tax rate, what is its after-tax cost of debt?

a. The pre-tax cost of debt is _____ % per year. (Round to four decimal places.)

b. If Avicorp faces a 40% tax rate, the after-tax cost of debt is _____ %.(Round to four decimal places.)

Reference no: EM131940016

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