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A company has recently borrowed US$12m from a bank. Interest is payable on the bank loan at 10.25% each year. Corporate tax is payable at

A company has recently borrowed US$12m from a bank. Interest is payable on the bank loan at 10.25% each year. Corporate tax is payable at 21%. All interest payments are tax allowable. What is the post-tax cost of the bank borrowings? Solution A.2.15% B.8.10% C.10.25% D.US$1.23m

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