A bank is in the process of renegotiating a loan. The principal outstanding is $50 million and

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A bank is in the process of renegotiating a loan. The principal outstanding is $50 million and is to be paid back in two annual installments of $20 and $30 million each, plus interest of 9 percent. The new terms will stretch the loan out to 4 years with no principal payments for the first two years (interest will be paid). The principal will be paid in the last two years in payments of $25 million along with interest of 7 percent. The cost of funds for the bank is 5 percent for both the old loan and the renegotiated loan. An up-front fee of 1 percent is to be included for the renegotiated loan. What is the PV of the renegotiated loan? (1point)

A.$52.99
B.$53.63
C.$53.13
D.$50

Posted Date: May 17, 2024 05:04 PM

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A bank is in the process of renegotiating a loan. The principal outstanding is $50 million and

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