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can you please fill out the chart 5, (10 points) Wells Fargo is considering making a $50 million loan to Boeing. The annual interest rate
can you please fill out the chart
5, (10 points) Wells Fargo is considering making a $50 million loan to Boeing. The annual interest rate on this loan is 10% (net of expenses). Boeing is supposed to pay interest at the end of year 1 , and interest plus principal at the end of year 2 . The survival rate is 92% per year and the recovery rate is 50%. The credit default swap (CDS) spread is 4%. The annualized risk-free rate is 3%. If Wells Fargo decides to make the loan, it will also purchase a CDS to hedge the credit risk. What is the NPV of this loan? (use the following diagram)Step by Step Solution
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