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Long Corporation is planning to raise $3.25 million for three years at an interest rate of 7.35 percent to finance its expansion. The municipal government
Long Corporation is planning to raise $3.25 million for three years at an interest rate of 7.35 percent to finance its expansion. The municipal government has just offered the firm the $3.25 million they need at 5.25 percent if the firm builds inside the municipality, pays the interest annually, and repays the principal at the end of three years. What is the net present value of the loan to Long Corporation if the firms tax rate is 21 percent and it accepts the municipalitys offer
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