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A company has an existing bank loan of Kshs.5,000,000 with an interest rate of 13%. What is the cost of this loan if the tax rate is 30%? a. 7% b. 9.1% c. 30% d. 13%

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 14P

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A company has an existing bank loan of Kshs.5,000,000 with an interest rate of 13%. What is the cost of this loan if the tax rate is 30%?

9.1%

30%

13%

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