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Hello, I am confused on how the professor wants us to show the NPV,TVM of this problem. i understand the question a little bit however
Hello, I am confused on how the professor wants us to show the NPV,TVM of this problem. i understand the question a little bit however i am having trouble completing it. I would like to see if anyone can give me a step by step guide. I have attached the problem as well as an excel template for the answer that my professor provided.
Thank you,
Case 3-1 Study Hints (Lightpoint, Inc.) In order to make a reasonable financing recommendation, you must first complete amortization schedules for each of the two case scenarios presented. Using the bond amortization information presented in the text (and the partial amortization tables presented below), you should be able to construct the necessary tables. Note that the two scenarios given in the case are not exactly the same as those outlined in the chapter so you will need to use some analytical skills to work through the options presented. After you've created your tables, outline the impact of each option on the financial statements (balance sheets, income statements, and statements of cash flows) for two years (2017 and 2018). This analysis will become the basis of your support for the option selected. Note that there is no one correct recommendation. Just be sure to support your choice with reasonable financial analysis. Partial Amortization Table for Conventional 4% Par Value Term Bonds Date 1/1/2017 12/31/2017 $ Cash Paid-4% Int. Exp 4% Amortized Discount Unamort. Discount $ 8,000,000 $ 8,000,000 $ P.V of Bonds - - $ 200,000,000 200,000,000 Partial Amortization Table for 0% Zero-Percent Term Bonds (effectively yielding 6% interest) Date 1/1/2017 12/31/2017 $ Cash Paid-0% Int. Exp 6% Amortized Discount Unamort. Discount $ - $ 12,000,000 $ 12,000,000 158,170,000 $ 146,170,000 P.V of Bonds 200,000,000 212,000,000Step by Step Solution
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