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# 18. Today is January 1, 2009. The state of Iowa has offered your firm a subsidized loan. It will be in the amount of \$10,000,000 at an interest rate...

This question was created from Chapter 18 International Capital Budgeting[1] https://www.coursehero.com/file/12932745/Chapter-18-International-Capital-Budgeting1/

How to compute principal 3,172,085 this amount and rest of them ?

18. Today is January 1, 2009. The state of Iowa has offered your firm a subsidized loan. It will be
in the amount of \$10,000,000 at an interest rate of 5% and have ANNUAL (amortizing)
payments over 3 years. The first payment is due December 31, 2009 and your taxes are due
January 1 of each year on the previous year's income. The yield to maturity on your firm’s
existing debt is 8%. What is the APV of this subsidized loan? Note that I did not round my intermediate steps. If you did, your answer may be off by a bit.
Select the answer closest to yours. A. —\$3,497,224.43 B. \$417,201.05 L \$840,797 D. None of the above First, enter the loan into a financial calculator and solve for the payment:
PV= 10,000,000 N= 3 I: 5% PMT = 3,672,085 Then amortize the loan:

Payment 1 = 3672085 - 500000 = 3272085... View the full answer

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