Compute the effective annual return

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Reference no: EM131343152

Avicorp has a $14.2 million debt issue? outstanding, with a 6.2% 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 94% of par value.

a. What is? Avicorp's pre-tax cost of? debt? Note: Compute the effective annual return. (Round answer to four decimal places)

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

Reference no: EM131343152

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