A small business received a five-year $1,000,000 loan at a subsidized rate of 3 percent per year. The firm will pay 3 percent in annual interest and will pay the principal at the end of the five years. If the market interest rate on similar loans is 6 percent per year, what is the NPV of the loan? (Ignore taxes.) O +$348,369 O -$137,391 -$501,595 O +$126,371
A small business received a five-year $1,000,000 loan at a subsidized rate of 3 percent per year. The firm will pay 3 percent in annual interest and will pay the principal at the end of the five years. If the market interest rate on similar loans is 6 percent per year, what is the NPV of the loan? (Ignore taxes.) O +$348,369 O -$137,391 -$501,595 O +$126,371
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:A small business received a five-year $1,000,000 loan at a subsidized rate of 3 percent per year. The
firm will pay 3 percent in annual interest and will pay the principal at the end of the five years. If the
market interest rate on similar loans is 6 percent per year, what is the NPV of the loan? (Ignore
taxes.)
+$348,369
O -$137,391
0 - $501,595
O +$126,371
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