Stancorp has a $13.8 million debt issue outstanding, with a 6.2% coupon rate. The debt has semi-annual coupons, with t
Posted: Sat Nov 27, 2021 5:15 pm
Stancorp has a
$13.8
million debt issue outstanding, with a
6.2%
coupon rate. The debt has semi-annual coupons, with the
next coupon is due in six months. The debt matures in five years.
It is currently priced at
93%
of par value.
a. What is Stancorp's pre-tax cost of debt? Note:
Compute the effective annual return.
b. If Stancorp faces a
30%
tax rate, what is its after-tax cost
of debt?
$13.8
million debt issue outstanding, with a
6.2%
coupon rate. The debt has semi-annual coupons, with the
next coupon is due in six months. The debt matures in five years.
It is currently priced at
93%
of par value.
a. What is Stancorp's pre-tax cost of debt? Note:
Compute the effective annual return.
b. If Stancorp faces a
30%
tax rate, what is its after-tax cost
of debt?