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
Chapter13: Other Financing Alternatives
Section: Chapter Questions
Problem 1bM
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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?
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