Stancorp has a $11.7 million debt issue outstanding, with a 6.1% coupon rate. The debt has semi-annual coupons, with t
Posted: Sat Nov 27, 2021 5:18 pm
Stancorp has a $11.7 million debt issue outstanding, with a
6.1% 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 96% of par value.
a. What is Stancorp's pre-tax cost of debt? Note: Compute the
effective annual return (Round to four decimal places.)
. b. If Stancorp faces a 30% tax rate, what is its after-tax
cost of debt? (Round to four decimal places.)
6.1% 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 96% of par value.
a. What is Stancorp's pre-tax cost of debt? Note: Compute the
effective annual return (Round to four decimal places.)
. b. If Stancorp faces a 30% tax rate, what is its after-tax
cost of debt? (Round to four decimal places.)