Today Is January 1, 2009

question 78

Multiple Choice

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 today 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)$406,023.10
• B)$840,797
• C)$64,157.38
• D)$20,659.77
• E)None of the other answers are within $100 of my answer

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A principle that suggests individuals have common traits or experiences that link them together.

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