Avicorp has a 117 million debt issue outstanding with a 59, Financial Management

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Avicorp has a 117 million debt issue outstanding with a 59

Avicorp has a $11.7 million debt issue outstanding, with a 5.9% coupon rate. The debt has semi-annual coupons, the next coupon is due in 6 months, and the debt matures in 5 years. It is currently priced at 93% of par value.

a. What is Avicorp's pre-tax cost of debt? Note: Compute the effective annual return.

b. If Avicorp faces a 40% tax rate, what is the after-tax cost of debt?

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Financial Management: Avicorp has a 117 million debt issue outstanding with a 59

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Financial Management: Avicorp has a 117 million debt issue outstanding with a 59

Reference No:- TGS01420332

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