What is the npv of the loan guarantee

Assignment Help Financial Management
Reference no: EM132061252

Arcos Corporation, a U. S. firm, is trying to fund a project in Mexico. The Mexican government has offered Arcos a loan guarantee that will enable it to borrow MXN 20 million for six years at an annual interest cost of 6 percent. Without this guarantee, Arcos would have paid a rate of 9 percent. What is the NPV of the loan guarantee?

Reference no: EM132061252

Questions Cloud

What is the npv from the subsidiary perspective : The subsidiary- level cost of capital for this project is 18 percent. What is the NPV from the subsidiary’s perspective?
What are the financial instruments traded on capital market : What are the financial instruments traded on the capital market?
Long term debt-total assets and long term debt-equity ratio : Compare your firm's long term debt/total assets and long term debt/equity ratio with your matching firm
Calculate the bond equivalent yield : Calculate the bond equivalent yield on a 52-day T-bill selling for $985.55 of its face?
What is the npv of the loan guarantee : Without this guarantee, Arcos would have paid a rate of 9 percent. What is the NPV of the loan guarantee?
What is npv of blocked funds : Assume that the foreign government forces the firm to place all cash flows in a bank account. What is the NPV of blocked funds?
What is the bond equivalent yield on this commercial paper : A firm buys $1,000,000 of a 30-day commercial paper issue for $995,450. What is the bond equivalent yield on this commercial paper?
What are financial instruments traded on money market : What are financial instruments traded on the money market?
What is the npv of the project to the parent : You have additional information that the local financing was obtained at a cost of 6 percent. What is the NPV of the project to the parent?

Reviews

Write a Review

Financial Management Questions & Answers

  Multiple choice - financial management question

Investment income resulting from the investment of both the reserves established to pay off future claims and the property and casualty company's surplus

  Intermediate-term government bonds are normally distributed

Suppose the returns on intermediate-term government bonds are normally distributed. What range would you expect to see 99% of the time?

  Capital investment is expected to achieve long-term benefits

A capital investment is expected to achieve long-term benefits for the organization. These benefits generally fall into three categories. Identify and discuss these categories. Is there one category that seems to be more important than the others? Ar..

  Estimate the free cash flows to the firm for the future

To estimate the cost of capital, you need to include an estimate of the cost of debt and calculate the weighted average cost of capital for your company.) Estimate the free cash flows to the firm for the future.

  Forecast broussards additional funds needed for coming year

Use the AFN equation to forecast Broussard's additional funds needed for the coming year.

  What is present worth for the optimum investment portfolio

This problem has been submitted once already but the solution did not provide me any feedback to my how the calulations are made. I am looking to uncover how the present worth of each investment option was solved for? Which alternatives should Polari..

  Calculate Return on Equity and identify the company with ROE

The company with the higher ROE will have a higher sustainable growth rate and thus have a higher intrinsic value.

  About can be accomplished by making payments

The purchase of the car that Joe dreams about can be accomplished by making payments of $300 a month for six years,

  Under the terms of an interest rate swap

Under the terms of an interest rate swap, The LIBOR rate is 11% per annum far all maturities compounded continuously. What is the value of the swap.

  Positive relationship between risk and return

The capital Asset Pricing Model/SML dictates a positive relationship between risk and return.

  What is the standard deviation of these returns

A stock had returns of 10 percent, -6 percent, 6 percent, and 14 percent over the past four years. What is the standard deviation of these returns?

  What is expected return of your portfolio

What is the expected return of your portfolio?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd