Suppose that one of the inducements provided by Taiwan to woo Xidex into setting up a local production facility is a 10-year, $12.5 million loan at 8% interest. The principal is to be repaid at the end of the tenth year. The market interest rate on such a loan is about 15%. With a marginal tax rate of 40%, how much is this loan worth to Xidex

Suppose that one of the inducements provided by Taiwan to woo Xidex into setting up a local production facility is a 10-year, $12.5 million loan at 8% interest. The principal is to be repaid at the end of the tenth year. The market interest rate on such a loan is about 15%. With a marginal tax rate of 40%, how much is this loan worth to Xidex

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter13: Other Financing Alternatives

Section: Chapter Questions

Problem 1bM

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