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What should STL do

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Reference no: EM132602278

Buy Case STL can purchase the same aircraft using a bank loan.

The terms of the loan are as follows:

Loan to value: 80%

Life of Loan: 20 Years

Interest Rate: 6.5%

Depreciation: Straight Line

Payment Frequency: Semi-Annual

Salvage Value in Year 20: $200K

Question 1: Evaluate this financing structure showing all the relevant cashflows

Question 2: Calculate the NPV of this structure

Question 3: What should STL do?

Reference no: EM132602278

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