What is the before-tax cost of debt for olympic

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Reference no: EM131187919

Olympic Sports has two issues of debt outstanding. One is a 6% coupon bond with a face value of $23 million, a maturity of 10 years, and a yield to maturity of 7%. The coupons are paid annually. The other bond issue has a maturity of 15 years, with coupons also paid annually, and a coupon rate of 7%. The face value of the issue is $28 million, and the issue sells for 95% of par value. The firm's tax rate is 40%

a. what is the before-tax cost of debt for Olympic? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places)

before-tax cost of debt _____________%

b. what is Olympic's after-tax cost of debt? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places)

after-tax cost of debt _______________%

Reference no: EM131187919

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