Taking on a long-term private debt placement

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Sports Inc. owns several sports franchises. One franchise is considering taking on a long-term private debt placement (i.e., borrow money) to expand their facilities. More specifically, they are seeking to borrow $30,000,000 to expand their team's practice facility. Three loan options have been provided by private lenders. They are:

  • $30,000,000 @ 6.00% for 30 years with $500,000 in finance fees
  • $30,000,000 @ 6.125% for 30 years with $450,000 in finance fees
  • $30,000,000 @ 6.125% for 15 years with $510,000 in finance fees

All loans are amortizing, compound monthly, and the client expects to refinance the facility in eight years.

Your task is to consul our client on which financing option is preferable to them in terms of Effective Rate (ER).ask is to consul our client on which financing option is preferable to them in terms of Effective Rate (ER).

Reference no: EM133253264

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