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The value of the subsidized loan in PV terms for this project is: Select one: a. $ 6.1 MM b. $ 6.5 MM c. $
The value of the subsidized loan in PV terms for this project is:
Select one:
a. $ 6.1 MM
b. $ 6.5 MM
c. $ 10.1 MM
d. $ 4.1 MM
e. cannot be determined
A mining company in Northern Quebec requires a total investment of $ 150 MM to open up a gold mine. R.E available for this project is $ 25 MM. The provincial government has agreed to loan up to $ 90 MM at a preferential rate of 5% while the market charges 8% to be repaid in full in 4 equal annual payments. If any new common shares are to be issued to finance this project, floatation cost of 3% will have to be incurred. The NPV of this project is estimated at $ (10) MM if assumed to be totally equity financed. A mining company in Northern Quebec requires a total investment of $ 150 MM to open up a gold mine. R.E available for this project is $ 25 MM. The provincial government has agreed to loan up to $ 90 MM at a preferential rate of 5% while the market charges 8% to be repaid in full in 4 equal annual payments. If any new common shares are to be issued to finance this project, floatation cost of 3% will have to be incurred. The NPV of this project is estimated at $ (10) MM if assumed to be totally equity financedStep by Step Solution
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