Lawell Manufacturing is planning to open a new plant. It will need to finance the debt with a 12-year loan with an interest rate of 10.55%. If the company pays an average tax rate of 35%, what is the difference between the before- and after-tax rates for this loan?

• AThe after-tax rate is 6.86% lower than the before-tax rate.
• BThe after-tax rate is 6.86% higher than the before-tax rate.
• CThe after-tax rate is 3.69% lower than the before-tax rate.
• DThe after-tax rate is 3.69% higher than the before-tax rate.