Danny is trying to determine if he should purchase equipment of this business this year or next year. he is currently in the 28% tax bracket and will be able to expense the equipment in the year he purchases it. with the new equipment, he believes that his marginal rate will increase to 33% next year. the cost of the equipment is $20,000 and his after-tax rate of return is 6%. calculate the after-tax cost of the equipment for both years and choose the correct statement below.

a. the after-tax cost of the equipment is $14,400 this year or $13,400 next year. danny should purchase the equipment this year.
b. the after-tax cost of the equipment is $14,400 this year or $13,776 next year. danny should purchase the equipment next year.
c. the after-tax cost of the equipment is $14,400 this year or $13,400 next year. danny should purchase the equipment next year.
d. the after-tax cost of the equipment is $14,400 this year or $13,776 next year. danny should purchase the equipment this year.

The east asiatic company (eac), a danish company with subsidiaries throughout asia, has been funding its bangkok subsidiary primarily with u. s. dollar debt because of the cost and availability of dollar capital as opposed to thai baht-denominated (b) debt. the treasurer of eac-thailand is considering a 1-year bank loan for $247,000.the current spot rate is b32.03 /$, and the dollar-based interest is 6.78% for the 1-year period. 1-year loans are 12.04% in baht. a. assuming expected inflation rates of 4.3 % and 1.24% in thailand and the united states, respectively, for the coming year, according to purchase power parity, what would the effective cost of funds be in thai baht terms? b. if eac's foreign exchange advisers believe strongly that the thai government wants to push the value of the baht down against the dollar by5% over the coming year (to promote its export competitiveness in dollar markets), what might the effective cost of funds end up being in baht terms? c. if eac could borrow thai baht at 13% per annum, would this be cheaper than either part (a) or part (b) above?