+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
A financial institution has just sold 1,000 7-month European call options on the Japanese yen.- Calculate the delta, gamma, vega, theta, and rho of the financial institution's
Corning (a glass and ceramics maker) has a stock price of $20.30 on November 1. Suppose it pays a 25 cent dividend on November 30, and the stock price at the end of the day on
The Falling Snow Company is considering production of a lighted world globe that the company would price at a markup of 0.30 above full cost. Management estimates that the var
Fred has limits of liability of 25/50/25 for his auto insurance. Fred ran into Jane’s car, causing $15,000 worth of damage to her Lexus and injuring Jane, whose medical bills
On November 15, 2009, Sandra Cook, a newly hired cost analyst at Demgren Company, was asked to predict overhead costs for the company's operations in 2010 when 530 unites are
The adjusted present value method (APV), the flow to equity (FTE) method, and the weighted average cost of capital (WACC) method produce equivalent results, but each can have
McKenna Sports Authority is getting ready to produce a new line of gold clubs by investing $1.85 million. The investment will result in additional cash flows of $525,000, $827
My company makes and sells golf cart tires at $95.25 each. His fixed operating costs are $570,000 and his variable operating costs are $24. Determine the number of units he ne