What is olympics after-tax cost of debt

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Reference no: EM131084224

Olympic Sports has two issues of debt outstanding. One is a 9 percent coupon bond with a face value of $20 million, a maturity of 10 years, and a yield to maturity of 10 percent. 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 percent. The face value of the issue is $25 million, and the issue sells for 94 percent of par value. The firm's tax rate is 35 percent.

a) What is the before-tax cost of debt for Olympic?

b) What is Olympic's after-tax cost of debt?

Reference no: EM131084224

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