+1-415-670-9189
info@expertsmind.com
Calculate net present value of loan including flotation cost
Course:- Financial Management
Reference No.:- EM13942977




Assignment Help
Assignment Help >> Financial Management

Daniel Kaffe, CFO of Kendrick Enterprises, is evaluating a 10-year, 5.90 percent loan with gross proceeds of $5,970,000. The interest payments on the loan will be made annually. Flotation costs are estimated to be 1.60 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 34 percent, and the loan will not increase the risk of financial distress for the company.

a. Calculate the net present value of the loan excluding flotation costs. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

 Net present value          $  

b. Calculate the net present value of the loan including flotation costs. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Net present value           $   




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Financial Management) Materials
Does the report flow in a logical order, is it well written with proper use of grammar, correct spelling and punctuation and There is nothing more disconcerting than mathemati
What is the primary goal of investor-owned corporations? What is the primary goal of most not-for-profit healthcare corporations? Are there substantial differences between the
Big Box retailing has a market capitalization of $500 million and 20 million shares outstanding. In order to finance its growth, the management of Big Box plans to raise furth
Charlie Hayes owns his own landscaping business, including all the land on which they grow their plants, and all the equipment. Charlie’s son Josh has just graduated from coll
A 30-year corporate bond sold to investors at par ($1000) with a 10 percent coupon rate is called sixteen years later at a 12 percent call premium. At the time of call, prevai
Dharma Supply has earnings before interest and taxes (EBIT) of $568,000, interest expenses of $299,000 and faces a corporate tax rate of 34 percent. a. What is Dharma Supply's
The effect of tax rate on WACC: K. Bell Jewelers wishes to exlore the effect on its cost of capital of the rate at which the company pays taxes. The firm wishes to maintain a
You hold a diversified portfolio consisting of a $5,000 investment in each of 20 different common stocks. The portfolio beta is equal to 1.15. You have decided to sell one of