ABC borrows $12,875 at a subsidized rate of 3.9% to invest in a project. The project lasts for 11 years and ABC repays the loan at the end of the project. If ABC's cost of debt is 6.8% and the tax rate is 39%, calculate the NPV of the this loan financing.
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ABC borrows $12,875 at a subsidized rate of 3.9% to invest in a project. The project lasts for 11 years and ABC repays the loan at the end of the project. If ABC's cost of debt is 6.8% and the tax rate is 39%, calculate the
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- Project A costs $5,000 and will generate annual after-tax net cash inflows of $1,800 for five years. What is the NPV using 8% as the discount rate?ABC borrows $12,827 at a subsidized rate of 2.5% to invest in a project. The project lasts for 14 years and ABC repays the loan at the end of the project. If ABC's cost of debt is 6.1% and the tax rate is 36%, calculate the NPV of the this loan financing. plz keep 4 decimal.BBC borrows a 19-year loan of $12,122 at 8% to finance a project. The corporate tax rate is 33%. If BBC is required to repay 1/5 of the loan at the end of year 7 and the remaining balance at the end of year 19, what is the net present value of this debt financing
- A $100,000 loan can be obtained at a 10 percent rate with monthly payments over a 15-year term.a. What is the after-tax effective interest rate on the loan, assuming the borrower is in a 30 percent tax bracket and the loan is held only three years? Assume that the benefit of interest deductions for tax purposes occurs at the same time payments are made.b. Calculate the after-tax effective cost for the above loan, assuming 5 points are charged and that the points are tax-deductible at the time they are paid.c. How does the after-tax cost in part (b) compare with the pretax effective cost of the loan?A 3,300,000 loan was granted to a borrower by Norayma Bank with a nominal interest rate of 12% which is paid every year end. The loan matures in 4 years on December 31, 2023. After considering the direct origination cost and origination fees, the market rate on the loan is 8%. 1,124,000 was earned as interest income for the whole term of the loan. If the origination fee was 100,000, determine the initial carrying cost of the loan. The answer is: 3,760,000 but I need the solution. ThanksCapital Computer Corporation takes out a $10,000 loan to finance the purchase of new physical capital. It must repay the loan in full with interest in one year. The interest rate is 10 percent and the applicable corporate tax rate is 30 percent. What is the present value savings from the deductibility of the interest payment from Capital Computer Corporation’s taxes? Please round your answer to the nearest dollar.
- Please include calculations: A $100,000 loan can be obtained at a 10 percent rate with monthly payments over a 15-year term. a. What is the after-tax effective interest rate on the loan, assuming the borrower is in a 30 percent tax bracket and the loan is held only three years? Assume that the benefit of interest deductions for tax purposes occurs at the same time payments are made. b. Calculate the after-tax effective cost for the above loan, assuming that 5 points are charged and that the points are tax deductible at the time they are paid. c. How does the after-tax cost in part (b) compare with the pretax effective cost of the loan?Dhofar Insurance Company has made an investment in another company that will guarantee it a cash flow of OMR 37250 each year for the next five years. If the company uses a discount rate of 15 percent on its investments, what is the present value of this investmentThe annual debt service on a property is $25,000 and the pre-tax cash flow is $50,000. If the mortgage capitalization rate is 8.5% and the overall rate is 10%, what is the indicated value of the property?
- John borrows $10,000 for 10 years and uses a sinking fund to repay the principal. The sinkingfund deposits earn an annual effective interest rate of 5%. The total required payment for both the interestand the sinking fund deposit made at the end of each year is $1,445.04. Calculate the annual effectiveinterest rate charged on the loan.Chuck’s Publishing, Inc. borrows $30,000 from Citicorp to finance the purchase of a new office cooling system. The loan has an interest rate of 12% and Chuck’s will be required to make annual payments for the next 3 years. Fill in the following loan amortization schedule for this transaction.A taxpayer can invest $10,000 in a taxable 10-year bond that yields an annual pretax return of 6 percent or buy land (a capital asset) for $10,000 that is expected to increase at an annual pre-tax rate of 4 percent. The taxpayer expects to hold the bond and the land for 10 years and expects to pay capital gains taxes of 20 percent when the land is sold. The taxpayer’s marginal tax rate on ordinary income is expected to be 25 percent throughout the 10-year period. Can you please show in Excel? I like to use formulas when possible. Thank you!
