1. a) A company is considering its first financing raise. It is considering the following venture loan. If you have Excel software, what is the effective rate of return on the following venture loan? If you are just using your calculator, compute the NPV of the following venture loan at a monthly 0.5% discount rate?(10 marks)
2. Principal $100,000
3. Annual Interest rate 6% (0.5% charged monthly on beginning of month balance of outstanding principal)
4. 2 year term
5. Principal repayments of $10,000 at the end of month 12 and month 18 with the balance to paid at the end of 2 years.
6. Up-front fee - 1.5% of principal payable attime of granting of loan
7. Monthly fee - $300 payable at each month end
8. A subscription for a nominal price for one-third of the company's equity. Post-money, the company is expected to be worth $90,000.