What is the real interest rate


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. (All other information remains the same as in Q's 42 & 43.) If your company's Tax Rate is 40%, what is the Real Interest Rate (=After-tax interest Rate) when tax-saving is realized? (Present your answer to the first decimal as in #. #). Please do not put "%" in your answer. Just put the number (for example, provide 1.0 for 1.0%)

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Accounting Basics: What is the real interest rate
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