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What is the real interest rate

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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.  (This is a simplified index to make calculation easy.)

If your company’s Tax Rate is 40%, what is the Real Interest Rate (=After-tax interest Rate)?  (Present your answer to the first decimal as in #. #). Please do not put "%" in your answer. Just put the number (for example, 1.0 for 1.0%)

Reference no: EM131552284

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