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Avicorp has a $12.8 million debt issue​ outstanding, with a 5.9% coupon rate. The debt has​...

Avicorp has a $12.8 million debt issue​ outstanding, with a 5.9% 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. **Answer MUST be rounded to FOUR decimal places**
a. What is​ Avicorp's pre-tax cost of​ debt? Note: Compute the effective annual return. ROUND TO 4 DECIMAL PLACES
b. If Avicorp faces a 40% tax​ rate, what is its​ after-tax cost of​ debt? ROUND TO 4 DECIMAL PLACES ​
Note: Assume that the firm will always be able to utilize its full interest tax shield.

(Please show work, a plus if shown in Excel with formulas shown!)

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jeff jeffy answered 2 years ago
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