Net present value of the loan excluding flotation costs

Assignment Help Financial Management

Reference no: EM132021419

Daniel Kaffe, CFO of Kendrick Enterprises, is evaluating a 10-year, 6.5 percent loan with gross proceeds of $6,000,000. The interest payments on the loan will be made annually. Flotation costs are estimated to be 1.9 percent of gross proceeds and will be amortized using a straight-line schedule over the 10-year life of the loan. The company has a tax rate of 34 percent, and the loan will not increase the risk of financial distress for the company.

a. Calculate the net present value of the loan excluding flotation costs. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Net present value $

b. Calculate the net present value of the loan including flotation costs. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Net present value $

Reference no: EM132021419

Questions Cloud

Incremental cost of going outside versus conducting survey : What is the incremental cost of going outside versus conducting the survey as in the past?

Is independent np practice allowed in your state : Is independent NP practice allowed in your state? Discuss your opinion regarding independent NP practice. Provide evidence for your response.

Various determinates of industry structure : Base on various determinates of industry structure, explain why drawing that conclusion makes some sense.

Prepare the closing entries at december : The ledger of Rowen Company contains the following balances: Retained Earnings $28,817; Prepare the closing entries at December 31

Net present value of the loan excluding flotation costs : Calculate the net present value of the loan excluding flotation costs.

What role does the media play in the promotion : Proper health and nutrition is of critical importance to the growth and development of young children yet many American children eat in ways.

Prepare a budgeted income statement for the first quarter : Asset accounts are cash, accounts receivable, inventory, and furniture and fixtures. Prepare a budgeted income statement for the first quarter of 2015

What is coupon rate if it pays semi-annual coupon payments : The face value is $1000 while the selling price is $1197.93. What is its coupon rate if it pays semi-annual coupon payments?

Consequences of stereotyping children with varying abilities : What have you learned about yourself and your perceptions of children varying abilities - What might be the consequences of stereotyping children

User Account

All Pages