What is the maximum amount granted as an unsecured loan given the below parameter? Net Sales: CHF 2'000'000 FCF: CHF 200'000 Credit appetite of lender: 6 years Interest rate after taxes: 4.0% Calculatory tax rate: 25%

What is the maximum amount granted as an unsecured loan given the below parameter? Net Sales: CHF 2'000'000 FCF: CHF 200'000 Credit appetite of lender: 6 years Interest rate after taxes: 4.0% Calculatory tax rate: 25%

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section4.17: Amortized Loans

Problem 1ST

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Concept explainers

Amortized Loans

The term "amortization" refers to spreading the value of a loan or a debt over a series of regular payments or installments comprising of both the principal and interest amount. It generally involves the process where in the value of a loan or an intangible asset is written down over its maturity period.

Question

What is the maximum amount granted
as an unsecured loan given the below
parameter?
Net Sales: CHF 2'000'000
FCF: CHF 200'000
Credit appetite of lender: 6 years
Interest rate after taxes: 4.0%
Calculatory tax rate: 25%

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