Question
You need to estimate the value of the subsidy and loan guarantee for an ECA that guarantees a fleet financing with a 15-year loan of
You need to estimate the value of the subsidy and loan guarantee for an ECA that guarantees a fleet financing with a 15-year loan of $800 million with quarterly payments (60 payments total). You use the EXIM bank approach to estimate the expected default loss (applied at the end of year 4 in the 16th Quarter). Your ECA is planning to charge a $17 million fee for this transaction. The fee is included in the loan, making the total amount of the loan $817 million. Following are the assumptions you are using: Probability of default 5% Loss given default 40%. Appropriate annual discount rate 6% Please provide the loan amortization schedule, the value of the risk-free loan, the value of the risky loan, the value of the subsidy, and the value of the loan guarantee. Please Use Excel to show the answer.
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