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A $20 million loan outstanding to the Nigerian government is currently in arrears with City Bank. After extensive negotiations, City Bank agrees to reduce the interest rates from 10 percent to 6 percent and to lengthen the maturity of the loan to 10 years from the present 5 years remaining to maturity. The principal of the loan is to be paid at maturity. There will no grace period and the first interest payment is expected at the end of the year.
Question 1: If the cost of funds is 5 percent for the bank, what is the present value of the loan prior to the rescheduling?
Question 2: What is the present value of the rescheduled loan to the bank?
Question 3: What is the concessionality of the rescheduled loan if the cost of funds remains at 5 percent and an up-front fee of 5 percent is charged?
Question 4: What up-front fee should the bank charge to make the concessionality equal zero?
If Titan Mining Corporation is evaluating a new investment project, what rate should the TMC use to discount the project's cash flows?
The adjusted gross estate of Howard Stark, decedent, is $12 million. Included in the gross estate is all of the stock in Stark Munitions, Inc. (E & P of $1.3 million), valued at $4.6 million as of the date of Howard’s death. Howard had acquired the s..
If BHPP’s last year earnings were $ 2.79, the market consensus for BHPP next period earnings is $ 2.69, and as an analyst you predict next period earnings to be $ 2.73; then the recommendation most consistent with your prediction is:
On January 1, 2011, Mulcahy Manufacturing Inc., a newly formed corporation, issued 1,000 shares of common stock in exchange for $135,600 cash. No other shares were issued during 2011, and no shares were repurchased by the corporation. Prepare the sto..
Calculate the arithmetic and geometric returns of the fund over the time frame given and discuss why the results are different
The following debit to equity ratio is for two companys in the same industry. Company A and Company Q. Debit to equity ratio 4.5 to 1, and 13.6 to 1. Which of the following statements is always true?
If the tax rate is 30 percent and the discount rate is 8 percent, what is the NPV of this project? (Do not round intermediate calculations)
Estimate the projects net cash flows over its five-year estimated life - What are the project's NPV and IRR? (Assume for now that the project has average risk.
If other investments of equal risk earn 6% annually, what is its future value? Round your answer to the nearest cent. what is its present value
Distinguish between sales and operational risk. Disk how a company can have a high degree of sales risk, yet a low degree of operating risk.
As a personal trainer I have decided to open an upscale health spa / resort and health club. What are the advantages and disadvantages of forming the business as a partnership and the advantages and disadvantages of forming as a corporation? What are..
Discuss the possible implications of selection the alternative measurement basis on financial reports.methods have been used by Nine Entertainment ltd
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