Calculate the npv of the loan

Assignment Help Finance Basics
Reference no: EM1340413

A small business is receiving a five-year $1,000,000 loan at a subsidized rate of 3% per year. The firm will pay 3% annual interest payment each year and the principal at the end of five years. If market interest rate on similar loans is 6% per year, what is the NPV of the loan?

Reference no: EM1340413

Questions Cloud

Explain negotiations and the zone of possible agreement : Explain Negotiations and the Zone of Possible Agreement and Describe this process and illustrate how the Zone of Possible Agreement could help you negotiate.
Explain compensation and equal pay act : Explain Compensation and Equal Pay Act and Demway admitted those duties were on par with Sentry's duties.
Calculate an abnormal return : Explain how these estimates would be used to calculate an abnormal return.
Explain how digital networks are transforming : Explain how Digital Networks are Transforming
Calculate the npv of the loan : A small business is receiving a five-year $1,000,000 loan at a subsidized rate of 3% per year. Calculate the NPV of the loan.
Explain legal requirements of employee discipline : Explain Legal Requirements of Employee Discipline and Discuss the legal requirements from the employer's standpoint in regards to employee discipline
Explain legal requirements of pay in an organization : Explain Legal Requirements of Pay in an Organization and An organization's pay should comply with the laws and Elaborate on the legal requirements in regards to pay within an organization
Calculate wacc : Chandeliers Corp. has no debt but can borrow at 7.4 percent.    Calculate WACC
Explain warranties- liability in practice : Explain Warranties- Liability in Practice and What types of statements, duration, and disclaimers would be typical to put in its express warranties and explain why

Reviews

Write a Review

Finance Basics Questions & Answers

  Computation of net present value and profitability index

Computation of net present value and profitability index of a project and expected net cash flows of $3,000 a year for 10 years if the project's required return is 12 percent

  Determining the future value

What is the future value of $1500 after 5 years if the appropriate interest rate is 12%, compounded monthly?

  Time value of money-internal rate of return

You're given a business opportunity to spend $12000 in Joe's Bakehouse. He offers to pay you $6000 in two year's time and then $11000 in 4 years' time. Find out the internal rate of return without using Excel.

  Evaluate the term capital budgeting

Evaluate the term Capital budgeting and What is the yield to call of Hood Corporation's bonds

  Describing the economic growth

Why is economic growth important? Why could the difference between the 2.5 percent and 3 percent annual growth rate be of great significance over many decades?

  Lottery-annuity or lump sum

Assume you won the lottery for $7M. You have the following two choices in how you want to receive your prize: Which is the better option?

  Effect of inflation on purchasing power of bond

ourteen years ago, the U.S. Aluminum Corporation borrowed $9.9 million. To sustain the original $9.9 million purchasing power, how much must the lender be repaid? (Hint: Multiply the loan amount by one plus cumulative inflation).

  Impacts on nominal interest rates

Discuss how inflation or purchasing power impacts stated or nominal interest rates. Suggest the real-life example of how an annuity can be employed for retirement planning

  Excess return each year should the actively managed

Find out excess return each year should the actively managed fund earn to overcome higher fees.

  Computing dividend pay-out ratio

Computing dividend pay-out ratio and the company forecasts this year's net income to be $600,000

  Local and capital structure

Why might a firm use a "local" capital structure at the particular subsidiary which differs substantially from its "global" capital structure?

  Tvm concept-value of money

XYZ company has a balloon payment coming due from the recent acquisition. What TVM concept (s) is represented in the condition? What is the value of money represented by the situation?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd