Question: The cost interest rate of the loan Jackie needs for

The cost (interest rate) of the loan Jackie needs for her business is 8 percent per year. Given that the company’s net income will fall by less than the amount of interest paid, is Jackie correct to think that the after-tax cost of the loan is lower than 8 percent? With a tax rate of 25 percent, what is the after-tax cost of this loan?

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  • CreatedFebruary 25, 2015
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