Where on earth are we going to borrow at 3 % ?
neutral
user
We can borrow from a bank , the gross interest rate will be something like 7 % . With corporate tax at say 30 % . We are only paying on 50 % of this . There is still inflation to consider .
neutral
assistant
You can knock off another 2 % for that .
neutral
user
We can borrow as much as we can .
neutral
assistant
Not quite , if we get too heavily in debt , the shares will tend to drop .
neutral
user
How much loan capital can we safely raise then ?
neutral
assistant