Question: can someone help me with this practice problem and make sure u round the answers to four decimal places Avicorp has a 510 2 million
Avicorp has a 510 2 million debt issue outstanding with a 62 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 pro-tax cost of debt? Note: Compute the effective annual return b. If Avicorp faces a 40% tax rate, what is its after-tax cost of detit? Note. Assume that the firm will always be able to utilize its full interest tax Shield a. The cost of debt is 7 92% per year (Round to four deomal places)
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