What is the npv of the loan guarantee

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Reference no: EM13919361

Financing Subsidy. 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 10 million for five years at annual interest cost of 5 percent. Without this guarantee, Arcos would have paid a rate of 8 percent. What is the npv of the loan guarantee?

Reference no: EM13919361

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