What is stancorp pre-tax cost of debt

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Question - Stancorp has a $14.4 million debt issue outstanding, with a 6.2% coupon rate. The debt has semi-annual coupons, with the next coupon is due in six months. The debt matures in five years. It is currently priced at 94% of par value.

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

b. If Stancorp faces a 30% tax rate, what is its after-tax cost of debt?

Reference no: EM133269726

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