Save annually in before-tax franc interest expense

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Reference no: EM13942042

Suppose that the cost of borrowing restricted Swiss Francs is 7% annually, whereas the market rate for these funds is 12%. Suppose that a firm can borrow SF 10 million of restricted funds.

(i) How much will it save annually in before-tax Franc interest expense?

(ii) How much will it save annually in after-tax Franc interest expense if the corporate tax rate is 25%?

Reference no: EM13942042

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