Calculate the maximum amount of term B loan that can be borrowed against year 5 free cash flows, using assumptions below. No other debt tranches are present in the capital structure except for term loan A, B and C. Interest rate on amortizing term A loan, paid in cash Interest rate on bullet repayment term B loan, paid in cash Interest rate on bullet repayment term C loan, paid in cash Marginal tax rate Pre-tax interest Post tax interest Term (years) 5.0% 3.5% 6.0% 4.2% 7.0% 4.9% 30.0% Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Free cash flows 100.0 106.0 110.0 113.0 115.0 116.0 Year 6 Year 7 Year 8 Year 9 117.0 118.0 119.0 120.0 4.0 5.0 6.0 Year 10 121.0

Calculate the maximum amount of term B loan that can be borrowed against year 5 free cash flows, using assumptions below. No other debt tranches are present in the capital structure except for term loan A, B and C. Interest rate on amortizing term A loan, paid in cash Interest rate on bullet repayment term B loan, paid in cash Interest rate on bullet repayment term C loan, paid in cash Marginal tax rate Pre-tax interest Post tax interest Term (years) 5.0% 3.5% 6.0% 4.2% 7.0% 4.9% 30.0% Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Free cash flows 100.0 106.0 110.0 113.0 115.0 116.0 Year 6 Year 7 Year 8 Year 9 117.0 118.0 119.0 120.0 4.0 5.0 6.0 Year 10 121.0

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

Problem 1PS

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Qa 02.
The following table presents a series of income and expenses. Assume an interest rate of 5% per year. Years Income (LE) Expenses (LE) -71000 1-6 15000 -12000 7-9 37000 -18500 10-16 65100 -21700 Find the equivalent present value Find the equivalent value in year 6 Find the equivalent value in year 9 Find the equivalent value in year 16
A lender lends $10000 which is to be repaid in annual payments of $2100 for 6 years. Which of the following shows the timeline of the loan from the lenders perspective?
a) A bank made a 4-year 12% amortizing $2,500,000 loan with equal payments. What is the amount of interest and principal paid at the end of the 3rd year? What is the balance on the loan at the end of the 3rd year? b) Assume instead the bank demands that the borrower pay interest only for the first two years and then principal payments of $1,250,000 in years 3 and 4. What is the amount of interest and principal paid at the end of the 3rd year? What is the balance on the loan at the end of the 3rd year? Assume the same 12% rate of interest. For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac).
Find the lender's yield for this loan. - Loan amount: $125,000 - Term: 15 years - Interest rate: 6.50 % - Lender "points" and origination fee: 2,000 - Third-party fees: $2,500 - (Assume no prepayment)
None
Compound Interest Table Complete the following schedule for investments a through f by indicating the relevant factor from the present value or future value table and the final present or future value amount. Investment Compounding a. Annuity b. Annuity Annually Semiannually Semiannually Annually c. Annuity d. Single Payment e. Single Payment Semiannually f. Single Payment Semiannually Factor Answer $ a. $ Annual Interest Rate Amount 5% $2,000 4% 1,000 6% 14,000 •Note: Round your answers to the nearest whole dollar. •Note: Do not use a negative sign (-) with your answers. b. 5% 9,000 6% 16,000 4% 9,600 $ C. Investment $ Period d. $ Payment at Beg. or End e. of Period 2 years End 3 years Beginning 4 years Beginning 6 years n/a 5 years n/a 4 years n/a $ f. Future Value or Present Value Future Present Future Present Future Present
Your brother's business obtained a 30-year amortized mortgage loan for $175,000 at a nominal annual rate of 7.4%, with 360 end-of-month payments. The firm can deduct the interest paid for tax purposes. What will the interest tax deduction be for Year 1? a. $1,645.03 b. $14,539.98 c. $12,950.00 d. $11,825.05 e. $12,894.95
Am. 101.
Indicate whether the statement is true or false. 1. Given 10 and 30 year loans with the same interest rate, the 30 year loan results in a lower periodic payment. a. True b. False
Consider an asset with upfront cost of $32,639. The cost associated with it during the first year of operation is $3,415. The cost associated with it during the second year of operation is $12,099. With an interest rate of 0.08, what is a levelized cost payment payable at the end of years 1 and 2, which has the same present value as the actual cost stream at the end of period 0. The annuity formula for an interest rate of 0.08 and t payments is given by 0+ 2)-(¹-0)

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