A transportation project of Vietnam need to call in $ 250 million ODA in 30 years. ADB makes a commitment to finance the project with the following conditions: - Preferential interest rate is 2% per year, the grace period is 3 years, the nonrefundable aid is $ 15 million - Interest and principal are paid at 6-month term - The principal are paid regularly for the remaining term after the grace period - Market interest is estimated 8% per year during the project Requirement: Determine the granted elements of the project using this fomular

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3. Granted elements. GE Rf/a [1 - ------ ] x [1 - r 1 (1 + r)aG r (aM - aG) R₁: Preferential interest rate. 1 (1 + r)am --X L ‒‒‒‒‒‒‒ A a: number of payback per year. r: discount rate each term: r = (1 + r ₁) ¹/ª - 1 r₁: discount rate each year (market interest) G: grace period. M: lending period A: total amount of investment L: lending amount. x100% + A-L ‒‒‒‒‒‒‒ A x 100% 3. Granted elements. GE Rf/a [1 - ------ ] x [1 - r 1 (1 + r)aG r (aM - aG) R₁: Preferential interest rate. 1 (1 + r)am --X L ‒‒‒‒‒‒‒ A a: number of payback per year. r: discount rate each term: r = (1 + r ₁) ¹/ª - 1 r₁: discount rate each year (market interest) G: grace period. M: lending period A: total amount of investment L: lending amount. x100% + A-L ‒‒‒‒‒‒‒ A x 100%

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SOLUTION To determine the granted elements of the transportation project in Vietnam using the give... View the full answer