Calculating the real interest rate

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Reference no: EM131959309

Question: Your company is taking the loan of $1,260,000 for a new business plan. The interest rate is set at 6%. The entire debt must be paid in 5 years in an annuity payment plan. The Present Value Interest Factor for an Annuity (PVIFA - at 6% interest rate for 5 years) is 4.2000. (This is a simplified index to make calculation easy.)

If your company's Tax Rate is 40%, what is the Real Interest Rate (=After-tax interest Rate)?

Reference no: EM131959309

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