Answer:
The answer is "She saves on the trip".
Explanation:
Please find the complete question in the attached file.
Given:
The formula for Effective annual rate
Its potential value of its rental formula is used to measure the value of the rental at the middle of the 3rd year
The formula for the future annuity
Answer:
a. 7.30%
b. 4.745%
Explanation:
For computing the pretax cost of debt we have to applied the RATE formula i.e to be shown in the attachment below:
Given that,
Present value = $1,000 × 106% = $1,060
Assuming figure - Future value or Face value = $1,000
PMT = 1,000 × 8% ÷ 2 = $40
NPER = 14 years × 2 = 28 years
The formula is shown below:
= Rate(NPER;PMT;-PV;FV;type)
The present value come in negative
So, after applying the above formula
a. The pretax cost of debt is
= 3.65% × 2
= 7.30%
b. And, the after tax cost of debt would be
= Pretax cost of debt × ( 1 - tax rate)
= 7.30 % × ( 1 - 0.35)
= 4.745%
