Avicorp has a $13.3 million debt issue outstanding, with a 61% coupon rate. The debt has…

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Avicorp has a $13.3 million debt issue outstanding, with a 61% coupon rate. The debt has semiannual coupons, the next coupon e 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 effective annual return b. If Avicorp faces a 40% tax rate, what is its after tax cost of debt? Note Assume that the firm will ways be to its full interest tax shield a. The cost of debt is ? % per year. (Round to four decimal places.) b. Il Amicorp faces a 40% tax rate, the after-tax cost of debt is (Round to four decimal places

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