What is avicorp pre-tax cost of debt

Assignment Help Finance Basics
Reference no: EM133119007

Avicorp has a $10.2 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 93% 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: EM133119007

Questions Cloud

What ethical decision-making perspective : More than 180-that is the number of school shootings since 2009, and more than 356 people have died as a result. The tragedy at Stoneman Douglas High School in
Annual gerontology conference : Imagine you have been asked to prepare a presentation for the Annual Gerontology Conference. Foundational concepts of gerontology
What is the primary use of us treasury securities : What is the primary use of U.S. Treasury securities? Why are the interest rates on Treasury securities so low? If people worried about the United States default
Continuing physical? therapy : Julie Rios has? take-home pay of ?$4,640 per month and a disability insurance policy that replaces 60 percent of earnings after a? 90-day (3-month) waiting peri
What is avicorp pre-tax cost of debt : Avicorp has a $10.2 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 deb
Demonstrate critical thinking about controversial issues : Demonstrate critical thinking about controversial issues in criminal justice administration and take a position on which course of action
What is the annual depreciation expense : a. What is the annual depreciation expense associated with this equipment?
Challenge the trajectory of your retirement-readiness : How will today's medicine and wellness-related services, products add or challenge the trajectory of your retirement-readiness.
How can future markets securities shape : How can future markets securities shape an investment portfolio?

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the amount of ace tax refund

What is the amount of Ace's tax refund if Ace carries back the 2015 NOL to 2013? Assume that Ace expects 2016's taxable income to be $400,000.

  Interest rate

To what extent do you agree or disagree with the following statement on a scale of 1 to 5 where 1 = strongly disagree and 5 = strongly agree? Please explain your answer. "If I needed a 30 year fixed, traditional (not FHA) mortgage, I would accept one..

  Some of the weaknesses of the payback method

What are some of the weaknesses of the payback method?

  Earning before interest and tax

The firm paid $1,940 in total interest and deducted $2,730 in depreciation expense. What is it's Earning before Interest and Tax?

  Determining the wacc and npv

-Tesla is planning to open its first manufacturing plant (for the production of batteries) outside the US. You are one of the financial analyst that will help a

  What are value stocks and what are growth stocks

What are value stocks. What are growth stocks. What is the reasoning that investors use for purchasing value or growth stocks

  What is the bond price

Consider a newly issued bond with a five-year maturity, a par value of $1,000, and a coupon rate of 5%. The yield to maturity is 8%. Assume semiannual coupon pa

  What is the cost of equity estimate according to the capm

Shoreline Physicians Group is a for-profit group practice in the state of South Carolina. What is the cost of equity estimate according to the CAPM

  Country analysis of india

Discuss Balance of Payments (Current Account surplus or deficit) , exchange rate, GDP growth, inflation, monetary policy, fiscal deficits/surpluses

  Why a cap can be valued as a portfolio

a) Explain why a cap can be valued as a portfolio of options on an interest rate.

  Assumptions about the distribution of bidders valuations

Do not construct a game box in justifying your answer. Do not make any assumptions about the distribution of bidders' valuations.

  Purchase shares of the fund

Which type of fund does not have a secondary market and its investors directly purchase shares of the fund from the fund management company?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd