Avicorp has a 145 million debt issue outstanding with a 61, Ask an Expert

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Avicorp has a $14.5 million debt issue outstanding, with a 6.1% 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. (round to 4 decimal places)

b. If Avicorp faces a 40% tax rate, what is its after-tax cost of debt? ( round to 4 decimal places)

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92100160

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