Question: To increase its market share, Sole Brother Inc. decided to borrow $5000 from its banker for the purchase of newspaper advertising for its shoe retail

To increase its market share, Sole Brother Inc. decided to borrow $5000 from its banker for the purchase of newspaper advertising for its shoe retail line. The loan is to be paid in four equal annual payments with 15% interest. The loan is discounted 6 points. The 6 "points" is an additional interest charge of 6% of the loan, deducted immediately. This additional interest 6 %(5000) =$300 means the actual amount received from the $5000 loan is $4700. The $300 additional interest may be deducted as four $75 additional annual interest payments. What is the after-tax interest rate on this loan?

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