What is the net present value of the loan

Assignment Help Financial Management

Reference no: EM131917948

1. A project has an unlevered NPV of $1.5 million. To finance the project, debt is being issued with associated flotation costs of $60,000. The flotation costs can be amortized over the project's 5-year life. The debt of $10 million is being issued at the market interest rate of 10 percent, with principal repaid in a lump sum at the end of the fifth year. If the firm's tax rate is 34 percent, calculate the project's APV.

$1,494,028 88

$1,909,417

$2,441,107

$2,744,334

$2,384,312

2. TTC is planning to raise $3.25 million for three years at an interest rate of 7.35 percent to finance their expansion. The Alban County Board of Commissioners has just offered the firm the $3.25 million they need at 5.25 percent if the firm builds in Alban County, pays the interest annually, and repays the principal at the end of three years. What is the net present value of the loan to TTC if the firm’s tax rate is 34 percent and it accepts the county’s offer?

$329,245.19

$186,415.92

$293,651.12

$346,089.97

$212,100.00

Reference no: EM131917948

Questions Cloud

Explain roles of interest rate risk-reinvestment rate risk : Explain the roles of interest rate risk and reinvestment rate risk in this example.

Compute new price and percentage price change for each bond : Compute the new price and the percentage price change for each bond if the term structure instantaneously shifts from 5% to 4.5%.

Consider a 10-year zero coupon bond. : Consider a 10-year zero coupon bond. Assuming the yield-to-maturity is 5%, compute the bond’s modified duration.

Capital budgeting project is purchased-firm value : If a capital budgeting project is purchased, a firm's value, and thus its stockholders' wealth, will increase by the amount of the project's _____.

What is the net present value of the loan : What is the net present value of the loan to TTC if the firm’s tax rate is 34 percent and it accepts the county’s offer?

Find traditional payback period for intial investment : Find the traditional payback period for an intial investment of $110,000 with cash flows of 25,000 for 5 years.

Multiple internal rates of return from the project : determine the multiple internal rates of return from the project. determine the duration of the project.

What is expected return on equity : what is the expected Return on Equity?

Which no arbitrage opportunity exists : Find the values of c for which no arbitrage opportunity exists (for what values of c does a solution to the system exist?).

User Account

All Pages