What is avicorps pre-tax cost of debt

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Reference no: EM13263605

Avicorp has a $11.7 million debt issue outstanding, with a 5.8% 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 95% of par value.

a) What is Avicorp's pre-tax cost of debt?

b) If Avicorp faces a 40% tax rate, what is its after-tax cost of debt?

 

Reference no: EM13263605

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