Hi, please help me with this exercise. Please explain me step by step and please
ID: 2527741 • Letter: H
Question
Hi, please help me with this exercise. Please explain me step by step and please write with very good calligraphy. Thank you very much!
You have a company called Rubiko, you need to finance a project via debt with the bank Gamma.
After consulting the Gamma bank (?), Rubiko's financial advisor observed that this bank had a very particular payment structure and presented the cash flow of the after-tax debt to the board:
Determine what the cash flow of the after-tax debt is in year 8 (X) and the effective after-tax cost for this funding source.
B) How do the different types of payment affect (the effective cost of the debt after taxes? Why?
Types of pyment:
Credit payable with constant amortization
Credit payable with constant fees
Bullet type credits
Thank you very much.
Gamma bank Maximum amount $55’000.000 Interest rate 11,3 % Anual Term (years) 8 Payment type - cash flow of debt after taxes $55.000.000 $9.000.000 Year ?? 0 1 2 9.000.000) 9.000.000 ($12.000.000) $10.000.000 4 ($ 7.000.000) 10.000.000 X$Explanation / Answer
A. To solve this question we have to create LOAN AMORTASIZATION table. Following are steps:-
LOAN AMORTIZATION TABLE
Year
Principle
Installment
Interest
Principle repayment
Balance
1
55,000,000
9,000,000
6,215,000
2,785,000
52,215,000
2
52,215,000
9,000,000
5,900,295
3,099,705
49,115,295
3
49,115,295
9,000,000
5,550,028
3,449,972
45,665,323
4
45,665,323
12,000,000
5,160,182
6,839,818
38,825,505
5
38,825,505
10,000,000
4,387,282
5,612,718
33,212,787
6
33,212,787
7,000,000
3,753,045
3,246,955
29,965,832
7
29,965,832
10,000,000
3,386,139
6,613,861
23,351,971
8
23,351,971
25,990,744
2,638,773
23,351,971
-
TOTAL INTEREST 36,990,744
Cash flow of the after-tax debt is in year 8 = 25,990,744
Effective after-tax cost for this funding = 36,990,744
Due to time contraint 2nd part cannot be solved. Please uploade this part again.
Year
Principle
Installment
Interest
Principle repayment
Balance
1
55,000,000
9,000,000
6,215,000
2,785,000
52,215,000
2
52,215,000
9,000,000
5,900,295
3,099,705
49,115,295
3
49,115,295
9,000,000
5,550,028
3,449,972
45,665,323
4
45,665,323
12,000,000
5,160,182
6,839,818
38,825,505
5
38,825,505
10,000,000
4,387,282
5,612,718
33,212,787
6
33,212,787
7,000,000
3,753,045
3,246,955
29,965,832
7
29,965,832
10,000,000
3,386,139
6,613,861
23,351,971
8
23,351,971
25,990,744
2,638,773
23,351,971
-
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