Hi can someone please help explain something to me. I am working on a class problem for WACC.

In this WACC problem:

1) Corporate tax rate is 40%

2) the effective tax rate is 16%

3) Proportion of tax credits claimed by investors is 60%

I am trying to find the effective tax rate (Te= Tc(1-y)) of an overdraft. The information on the overdraft is:

1) Market Value = $300000

2) Overdrafts pay 11% interest pa, compounding daily.

I have found the nominal tax rate (11.63%)

I calculated the after tax effective rate to be 11.63(1-.16)= 84%

My lecturer has said that we need to get the answer 9.7658%, but I am unsure what the final step was, and how he got this.

Can someone please explain?

Thanks