Ms teresa is employed by Elmwood. She asked for a $300,000 intrest free loan.
She can acquire a regular mortgage at a rate of 4.5 % and th possible rate is 2%
Her tax rate on additional income is 46%. Elmwood Inc has an alternative investment opport unites that earn a before tax rate of 7%. Elmwood Inc is subject to a tax rate of 36% on additional amounts of income.
Evaluate ms monson's suggestion of providing her with an intrest free loan in lieu of salary from the point of view of the cost to Elmwood