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What is the before-tax cost of debt for olympic

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Olympic sports have two issues of debt outstanding .one is a 9 % coupon bond with a face value of $20 million, a maturity of 10 years, and a yield to maturity of 10%. The coupons are paid annually. The other bond issue has a maturity of 15 years, with coupons also paid annually and a coupon of 10%. the face value of the issue is $25 million and the issue sells for 92.8% of par value. the firm's tax rate is 30%.

Problem a. what is the before-tax cost of debt for Olympic?

Problem b. what is the after tax cost of debt?

Reference no: EM132797450

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