Daniel Kaffe, CFO of Kendrick Enterprises, is evaluating a 10-year, 6.5 percent loan with gross proceeds of $5,300,000.
Posted: Tue Apr 26, 2022 10:46 am
Daniel Kaffe, CFO of Kendrick Enterprises, is evaluating a
10-year, 6.5 percent loan with gross proceeds of $5,300,000. The
interest payments on the loan will be made annually. Flotation
costs are estimated to be 2.2 percent of gross proceeds and will be
amortized using a straight-line schedule over the 10-year life of
the loan. The company has a tax rate of 22 percent and the
loan will not increase the risk of financial distress for the
company.
Calculate the net present value of the loan excluding flotation
costs. (Do not round intermediate calculations and
round your answer to 2 decimal places, e.g., 32.16.)
10-year, 6.5 percent loan with gross proceeds of $5,300,000. The
interest payments on the loan will be made annually. Flotation
costs are estimated to be 2.2 percent of gross proceeds and will be
amortized using a straight-line schedule over the 10-year life of
the loan. The company has a tax rate of 22 percent and the
loan will not increase the risk of financial distress for the
company.
Calculate the net present value of the loan excluding flotation
costs. (Do not round intermediate calculations and
round your answer to 2 decimal places, e.g., 32.16.)