What is the impact in savings to the total company

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Company A has established a re-invoicing and cash center (the "Center"). The Center has inter-company receivable and payable relationships at zero interest rates. Company borrowed $5 million (tax rate 20%) and Company lent $5 million (tax rate 30%). The outside borrowing rate is 4% and the lending rate is 3%. What is the impact in savings to the total company via the Center arrangement and these transactions?

Reference no: EM132674603

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