Olympic Sports has two issues of debt outstanding. One is a 7% coupon bond with a face
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Olympic Sports has two issues of debt outstanding. One is a 7% coupon bond with a face value of $30 million, a maturity of 15 years, and a yield to maturity of 8%. The coupons are paid annually. The other bond issue has a maturity of 20 years, with coupons also paid annually, and a coupon rate of 8%. The face value of the issue is $35 million, and the issue sells for 94% of par value. The firm's tax rate is 30%.
- What is the before-tax cost of debt for Olympic?
- What is Olympic's after-tax cost of debt?
Note: For all the requirements, do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-0077861629
8th edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus
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