Cost of debt. olympic sports has two issues of debt, Ask an Expert

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Cost of Debt. Olympic Sports has 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 rate of 10%. The face value of the issue is $ 25 million, and the issue sells for 94% of par value. The firm's tax rate is 35%.
a. What is the before- tax cost of debt for Olympic?
b. What is Olympic's after- tax cost of debt?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M965940

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