Cost of Borrowing Comey Products has decided to acquire some new equipment having a $290,000 purchase...

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Cost of Borrowing Comey Products has decided to acquire some new equipment having a $290,000 purchase price. The equipment wi

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Answer 1

Answer #1

After-tax cost of borrowing = 5% x (1 - 25%) = 3.75%

Loan payment can be calculated using PMT function

N = 4, I/Y = 3.75%, PV = 290,000, FV = 0

=> Compute PMT = $79,421.94

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Answer 2

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