Today is January 1,2009.The state of Iowa has offered your firm a subsidized loan.It will be in the amount of $10,000,000 at an interest rate of 5 percent and have ANNUAL (amortizing) payments over 3 years.The first payment is due December 31,2009 and your taxes are due January 1 of each year on the previous year's income.The yield to maturity on your firm's existing debt is 8 percent.What is the APV of this subsidized loan? Note that I did not round my intermediate steps.If you did,your answer may be off by a bit.Select the answer closest to yours.
A) −$3,497,224.43
B) $417,201.05
C) $840,797
D) none of the options
Correct Answer:
Verified
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Q7: i = rdebt = 6% OCF0 =
Q8: i = rdebt = 10% OCF0 =
Q10: Capital budgeting analysis is very important,because it
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Q13: Today is January 1,2009.The state of Iowa
Q14: i = rdebt = 6% OCF0 =
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