Question
In: Finance
Daniel Kaffe, CFO of Kendrick Enterprises, is evaluating a 10-year, 6.90 percent loan with gross proceeds...
|
Daniel Kaffe, CFO of Kendrick Enterprises, is evaluating a 10-year, 6.90 percent loan with gross proceeds of $5,100,000. The interest payments on the loan will be made annually. Flotation costs are estimated to be 3.00 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 35 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 |
$ |
Solutions
jeff jeffy answered 3 years agoRelated Solutions
Daniel Kaffe, CFO of Kendrick Enterprises, is evaluating a 10-year, 7.3 percent loan with gross proceeds...
Daniel Kaffe, CFO of Kendrick Enterprises, is evaluating a
10-year, 7.3 percent loan with gross proceeds of $5,250,000. The
interest payments on the loan will be made annually. Flotation
costs are estimated to be 1.1 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...
Daniel Kaffe, CFO of Kendrick Enterprises, is evaluating a 10-year, 7.3 percent loan with gross proceeds...
Daniel Kaffe, CFO of Kendrick Enterprises, is evaluating a
10-year, 7.3 percent loan with gross proceeds of $5,250,000. The
interest payments on the loan will be made annually. Flotation
costs are estimated to be 1.1 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...
Daniel Kaffe, CFO of Kendrick Enterprises, is evaluating a 10-year, 6.5 percent loan with gross proceeds...
Daniel Kaffe, CFO of Kendrick Enterprises, is evaluating a
10-year, 6.5 percent loan with gross proceeds of $6,000,000. The
interest payments on the loan will be made annually. Flotation
costs are estimated to be 1.9 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...
Daniel Kaffe, CFO of Kendrick Enterprises, is evaluating a 10-year, 7.6 percent loan with gross proceeds...
Daniel Kaffe, CFO of Kendrick Enterprises, is evaluating a
10-year, 7.6 percent loan with gross proceeds of $6,400,000. The
interest payments on the loan will be made annually. Flotation
costs are estimated to be 2.7 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 23 percent and the loan
will not increase the risk of financial distress for the
company.
a.
Calculate...
Daniel Kaffe, CFO of Kendrick Enterprises, is evaluating a 10-year, 5.9 percent loan with gross proceeds...
Daniel Kaffe, CFO of Kendrick Enterprises, is evaluating a
10-year, 5.9 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 1.6 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 Ka of a monoprotic weak acid is 6.90 × 10-3. What is the percent ionization...
The Ka of a monoprotic weak acid is 6.90 × 10-3. What is the
percent ionization of a 0.176 M solution of this acid?
B. J. Gautney Enterprises is evaluating a security. One-year Treasury bills are currently paying 4.6 percent.
(Expected rate of return and risk)B. J. Gautney Enterprises is evaluating a security. One-year
Treasury bills are currently paying 4.6 percent. Calculate the investment's expected return and its
standard deviation. Should Gautney invest in this security?ProbabilityReturn0.05−5%0.351%0.556%0.059%
Consider two bonds, a 3-year bond paying an annual coupon of 6.90% and a 10-year bond...
Consider two bonds, a 3-year bond paying an annual coupon of
6.90% and a 10-year bond also with an annual coupon of 6.90%. Both
currently sell at a face value of $1,000. Now suppose interest
rates rise to 12%.
a. What is the new price of the 3-year bonds?
(Do not round intermediate calculations. Round your answer
to 2 decimal places.)
b. What is the new price of the 10-year bonds?
(Do not round intermediate calculations. Round your answer
to...
Prepare an amortization schedule for a three-year loan of $111,000. The interest rate is 10 percent...
Prepare an amortization schedule for a three-year loan of
$111,000. The interest rate is 10 percent per year, and the loan
calls for equal annual payments. How much total interest is paid
over the life of the loan? (Leave no cells blank. Enter '0' where
necessary. Do not round intermediate calculations and round your
answers to 2 decimal places, e.g., 32.16.) Year Beginning Balance
Total Payment Interest Payment Principal Payment Ending Balance 1 $
111000 $ $ $ $ 2...
Springfield Bank is evaluating Creek Enterprises, which has requested a $ 3,750,000 loan, to assess the...
Springfield Bank is evaluating Creek Enterprises, which has
requested a $ 3,750,000 loan, to assess the firm's financial
leverage and financial risk. On the basis of the debt ratios for
Creek, along with the industry averages and Creek's recent
financial statements, evaluate and recommend appropriate action on
the loan request.
Industry Averages
Debt ratio: 0.46
Times interest earned ratio: 7.31
Fixed-payment coverage ratio: 2.00
Creek Enterprises Income Statement for the Year Ended
December 31, 2019
Sales revenue...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- What 2 things happen to the melting point of a solid when an impurity is present?
- How Can Hominin Evolution be characterized as " mosaic evolution" Use examples of species from the...
- Absorption and Variable Costing Income Statements for Two Months and Analysis During the first month of...
- Mobile and wireless devices are being increasingly used in the Business Administration and Management Industry. write...
- What are the options that might be considered in relation to introducing flexible work practices? What...
- Question 2 : Aggregate Scores: Write a program that opens 2 files, quiz.txt, and hw.txt. The...
- Define the term symbiosis specifically as it applies in a biological context. Compare and contrast parasitism,...
ADVERTISEMENT