Refer to Problem 12-33. To help pay for the pickup truck the Ogi Corp. obtained a $10,000 loan from the truck dealer, payable in four end-of-year payments of $2500 plus 10% interest on the loan balance each year.

(a) Compute the after-tax rate of return for the truck together with the loan. Note that the interest on the loan is tax deductible, but the $2500 principal payments are not.

(b) Why is the after-tax rate of return computed in part (a) so much different from the 12.5% obtained in Problem 12-33?