Avicorp has a $13.9 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.
A) What is Avicorp's pre-tax cost of debt? Note: Compute the EAR
B) If Avicorp faces a 40% tax rate, what is its after-tax cost of debt?
40% tax? rate, what is its? after-tax cost of? debt?