Question

A & S company has taken a loan of D10,000,000 from Trust Standard Chartered Bank Gambia Ltd. at 15% interest. What is the cost of term loan if the tax rate is 5%?

Answer 1

the cost of the term loan in the case when the tax rate is 5% is 14.25%

Step-by-step explanation:

The computation of the cost of the term loan in the case when the tax rate is 5%

The cost of term loan = Interest rate ×(1 - Tax rate)

= 15% × (1 - 0.05)

= 14.25%

hence, the cost of the term loan in the case when the tax rate is 5% is 14.25%

The same is to be considered and relevant