Question: cant get this right, please help ! Avicorp has a 512.3 million debt issue outstanding, with a 6.1% coupon tate. The debt has semi-annual coupons,
Avicorp has a 512.3 million debt issue outstanding, with a 6.1% coupon tate. The debt has semi-annual coupons, the next coupon is due in six months, and the debt matures in five years. 1 is curtently priced at 95% of par value. a. What is Avicoip's pre-tax cost of debt? Note: Compute the ellective annual return. b. If Avicorp faces a 400 , tax rate, what is its after-tax cost of debt? Note: Assume that the firm will atways be able to uticice its full interest tax shield. a. The cast of debt is ih per year. (Round to four decimal places.)
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