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What is? avicorp pre-tax cost of? debt

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Reference no: EM132813031

Avicorp has a $12.8 million debt issue? outstanding, with a 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 96% of par value.

Problem a. What is? Avicorp's pre-tax cost of? debt? Note: Compute the effective annual return.

Problem 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: EM132813031

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