Cost of Debt. Olympic Sports has two issues of debt outstanding. One is a 9 percent coupon bond with a face
To calculate the cost of debt, you need to consider the coupon rate, the face value of the bond, and the current market price of the bond.
Since Olympic Sports has two issues of debt, we'll need to calculate the cost of each issue separately.
1. Let's start with the first issue, which is a 9 percent coupon bond. This means the bond pays a coupon interest rate of 9% of its face value annually.
To calculate the cost of this bond, you need to consider the current market price of the bond. If you have the market price, you can use the following formula:
Cost of Debt = (Annual Interest Payment) / (Market Price of Bond)
However, you mentioned that only the face value of the bond is provided. In that case, you won't be able to calculate the exact cost of debt without the market price.
2. Now let's move on to the second issue of debt. You haven't provided any details or interest rate for this issue. Without these details, it's impossible to calculate the cost of debt for this specific bond.
In general, to calculate the cost of debt for a bond, you need the coupon rate, the face value of the bond, and the current market price. Using these factors, you can use the formula mentioned earlier to find the cost of debt.
Please provide more information if you have it, specifically the market price of the bond or any other relevant details, so we can help you calculate the cost of debt more accurately.