The ABC company needs a 3 year equipment that costs $$230$ million with zero salvage value and zero book value after 3 years on a straight $-$line depreciation basis. ABC's tax rate is $40\%$ABC plans to borrow $ $230$ million at the rate of $5.5\%$ on a 3 year, simple interest loan, and purchase this equipment. Discount rate is $5.5\%.$ What is the cost of borrowing and purchasing the equipment $?$

Answer rating: 100% (QA)

To calculate the cost of borrowing and purchasing the equipment we need to consider the loan amount ... View the full answer