Apple’s decision to borrow $17 billion instead of dipping into its $100 billion cash pile parked overseas shows how much cheaper it is for companies to tap debt markets than pay taxes on overseas earnings. Michelle Hanlon, professor of accounting at the MIT Sloan School of Management, breaks down the math. (May 1, 2013)
Apple has lost the biggest ever non. Issue at seventeen billion dollars I think an apple aren't in the US and leave it. Yes I'm sure that it turned out so our. I think it just basically my -- to -- thank you choose the cheaper option. They -- apple would repatriate. Eight panicking billion dollars which -- that they went about market wire. They have to hate somewhere around five point eight billion dollar in US active. About the money here in the US that they have created interest economy we -- -- deductible. And I'm -- at a very low grade -- apple issued go to Eric different. Tranches or pieces humane and those punishment is -- somewhere three years and our five year. And come at ten and thirty year. -- some -- including all of the different rates of interest that basically they're -- paid a billion probably an interest expense will be paid over. Many years going forward. Where -- at five point eight billion would need to be paid. Lately they've got my back to the US. Once you figure out the Fed interest expense to tax deductible. Up you know at least I would say -- -- billion dollar. Savings this this in my apple. I think terrible plot about the US -- good and it's not uncommon. You actually go fiscal and Microsoft told the excited about money and they actually stated explicitly that -- things -- -- Apple beating. There were doing it because picking -- where he's -- back home. If the government were allowed us to do that. We can perhaps as businesses bring back anywhere from 600 million to perhaps -- trillion how much when he went back I'll bring back off we've really. At what level of tax -- of those levels tax or commitment that you know otherwise it's a bad decision for my shareholders and and bad decision for me personally. This decision at this point in time my apple reflect both the hijacked cost of bringing everybody back to the US. And I also reflects the low interest cost because of the low interest rates and I demand that heavy security this is probably not the last. Debt issuance will be coming up on apple basically it stated they -- it distributes. A hundred billion in shareholder. By 2016. But anything -- fifteens. It is they're gonna have to file where are you that money that they have offshore.