Kelly Industries Is Given the Opportunity to Raise $5 Million

question 13

Multiple Choice

Kelly Industries is given the opportunity to raise $5 million in debt for four years through a local government subsidized program.While Kelly would normally be required to pay 12 percent on its debt issues,the Hampton County program sets the rate at 9 percent.What is the NPV of this subsidized loan? Ignore taxes.

• A)$518,364
• B)$296,007
• C)$384,312
• D)$455,602
• E)$0

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