What is the after-tax interest rate on this loan

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To increase its market share, Sole Brother Inc. decided to borrow $50,000 from its banker for the purchase of newspaper advertising for its shoe retail line. The loan is to be paid in four equal annual payments with 15% interest. The loan is discounted 12 points. The 6 "points" are an additional interest charge of 6% of the loan, deducted immediately. This additional interest 6 %(50,000) =$3,000 means the actual amount received from the $50,000 loan is $47,000. Another 6 points or $3,000 of additional interest may be deducted as four $750 additional annual interest payments. What is the after-tax interest rate on this loan?

Reference no: EM13795906

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