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Raid Gauloises. Raid Gauloises is a rapidly growing French sporting goods and adventure racing outfitter. The...

Raid Gauloises. Raid Gauloises is a rapidly growing French sporting goods and adventure racing outfitter. The company has decided to borrow euro €21,000,000 via a euro-euro floating rate loan for four years. Raid must decide between two competing loan offers from two of its banks. Banque de Paris has offered the four-year debt at euro-LIBOR + 2% with an up-front initiation fee of 1.800%. Banque de Sorbonne, however, has offered euro-LIBOR + 2.5% a higher spread, but with no loan initiation fees up-front, for the same term and principal. Both banks reset the interest rate at the end of each year. Euro-LIBOR is currently 3.800%. Raid's economist forecasts that LIBOR will rise by 0.500 percentage points each year. Banque de Sorbonne, however, officially forecasts euro-LIBOR to begin trending upward at the rate of 0.250 percentage points per year. Raid Gauloises's cost of capital is 11%. Which loan proposal do you recommend for Raid Gauloises?

1.For the Banque de Paris loan, the cash flow for Year 0 is euro€ . (Round to the nearest euro.)

2.For the Banque de Paris loan, the cash flow for Year 1 is euro€ . (Round to the nearest euro.)

3.For the Banque de Paris loan, the cash flow for Year 2 is euro€. (Round to the nearest euro.)

4.For the Banque de Paris loan, the cash flow for Year 3 is euro€1 . (Round to the nearest euro.)

5.For the Banque de Paris loan, the cash flow for Year 4 is euro€ . (Round to the nearest euro.)

6.For the Banque de Paris loan, the all-in-cost of funds if LIBOR rises by 0.5000.500 percentage points each year is %. (Round to four decimal places.)

7.For the Banque de Sorbonne loan, the cash flow for Year 0 is euro€ . (Round to the nearest euro.)

8.For the Banque de Sorbonne loan, the cash flow for Year 1 is euro€ . (Round to the nearest euro.)

9.For the Banque de Sorbonne loan, the cash flow for Year 2 is euro€ . (Round to the nearest euro.)

10.For the Banque de Sorbonne loan, the cash flow for Year 3 is euro€ . (Round to the nearest euro.)

11.For the Banque de Sorbonne loan, the cash flow for Year 4 is euro€ . (Round to the nearest euro.)

12. For the Banque de Sorbonne loan, the all-in-cost of funds if LIBOR rises by 0.250 percentage points each year is %. (Round to four decimal places.)

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Home nert Page Layout Formulas Data Review View dd-Ins Cut Σ AutoSum ー E ゴWrap Text aCopy в 1 프 . Ej-., Δ. : rーー 逻锂函Merge & Center. $, % , 弼,8 Conditional Format eCell Insert Delete Format Sort &Find & 2 ClearFe Select Edting Format Painter Formatting, as Table w styles. ▼ ㆆ ▼ Clipboard AU20 AK Alignment Number Cells AM AN AO AP AQ AR AS AT AU AV AW LOAN AMOUNT BANQUE DE PARIS PROPOSAL YEAR LIBOR SPREAD INTEREST RATE CHARGED INITIATION FEE 1000000 INCREASE OF 0.50% IN LIBOR 4 0 3.80% 2.00% 5.80% 1.80% 4.30% 2.00% 6.30% 4 5.80% 2.00% 7.80% 6 4.80% 2.00% 6.80% 5.30% 2.00% 7.30% 8 10 NET FUND RECEIVED AFTER DEDUCTION OF INITIATION FEE (21000000 (1-0.018) INTEREST PAYMENTS 12 13 14 15 16 17 18 19 20 11 1 20622000 1323000 1428000 1533000 1638000 PRINCIPAL PAYMENT TOTAL CASH FLOWS 21000000 132300014280001533000 -22638000 20622000 L IN COST OF FUNDS (IRR)- (0.50% INCREASE IN LIBOR) 7.5426% IRR(AN 19:AR19) I (EV PE EPS DIV ABNORMAL APV ROSS i deberk ( MARGIN MONEY al tax . PB ROPİ eEVA MVA LEVERAGED BUY SWAP distress BRIGHAN CAP GAIN 02:52 25-12-2018Home nert Page Layout Formulas Data Review View dd-Ins Cut Σ AutoSum Wrap Text ta copy ▼ в 1 프 . Ej-., Δ. : rーー 逻锂函Merge & Center. $, % , 弼,8 Conditional Format eCell Insert Delete Format Paste Sort &Find & 2 ClearFe Select Edting Format Painter Formatting, as Table w styles. ▼ ㆆ ▼ Clipboard AU40 AK Alignment Number AM AN AO AP AQ AR AS AT AU AV AW 23 24 25 26 27 28 29 30 LOAN AMOUNT BANQUE DE PARIS PROPOSAL YEAR LIBOR SPREAD INTEREST RATE CHARGED INITIATION FEE 1000000 INCREASE OF 0.25% IN LIBOR 0 3.80% 2.00% 5.80% 1.80% 4.05% 2.00% 6.05% 4.30% 2.00% 6.30% 4.55% 2.00% 6.55% 4 4.80% 2.00% 6.80% NET FUND RECEIVED AFTER DEDUCTION OF INITIATION FEE (21000000 (1-0.018) INTEREST PAYMENTS 32 20622000 34 35 36 37 38 39 40 11 1 1270500 1323000 -1375500 1428000 PRINCIPAL PAYMENT TOTAL CASH FLOWS 21000000 127050013230001375500-22428000 20622000 L IN COST OF FUNDS (IRR)- (0.25% INCREASE IN LIBOR) 6.9347% IRR(AN19:AR19) I (EV PE EPS DIV ABNORMAL APV ROSS i deberk ( MARGIN MONEY al tax . PB ROPİ eEVA MVA LEVERAGED BUY SWAP distress BRIGHAN CAP GAIN 福 130% 02:52 25-12-2018Home nert Page Layout Formulas Data Review View dd-Ins Cut Σ AutoSum ー E ゴWrap Text aCopy B า 프 . Ej-., Δ. : r_一 逻锂函Merge & Center. $, % , 弼,8 conditional Format . Cell Insert Delete Format Sort &Find & 2 ClearFe Select Edting Format Painter Formatting, as Table w styles. ▼ ㆆ ▼ Clipboard AU60 AK Alignment Number Cells AM AN AO AP AQ AR AS AT AU AV AW 42 43 LOAN AMOUNT BANQUE DE SORBONNE PROPOSAL YEAR LIBOR SPREAD INTEREST RATE CHARGED INITIATION FEE 1000000 INCREASE OF 0.50% IN LIBOR 45 46 47 48 49 50 0 3.80% 2.50% 6.30% 0.00% 4 5.80% 2.50% 8.30% 4.30% 2.50% 6.80% 4.80% 2.50% 7 .30% 5.30% 2.50% 7.80% NET FUND RECEIVED INTEREST PAYMENTS 21000000 52 53 54 1428000 1533000 1638000 1743000 PRINCIPAL PAYMENT TOTAL CASH FLOWS 21000000 00015330001638000 -22743000 10000001428 56 57 58 59 60 i1 1 ALL IN COST OF FUNDS (IRR)- (0.50% INCREASE IN LIBOR) 7.5048% IRR(AN55:AR55) İ (EV PE EPS DIV ABNORMAL . APV ROSS i deberk MARGIN MONEY al tax . PB ROPİ eEVA MVA LEVERAGED BUY SWAP distress BRIGHAN CAP GAIN 福 130% 02:52 25-12-2018Home nert Page Layout Formulas Data Review View dd-Ins Cut aCopy Σ AutoSum 11.A. A.--- 9- ー E ゴText ずWrap Text General Paste チFormat Painter B l U. ㄧ˙ タ.Δ. -=- 還便困Merge & Center. $,%,,Ma conditional Format Cell Insert Delete Format 2 ClearFe Select Edting Formatting, as Table w styles. ▼ ㆆ ▼ Clipboard Font Alignment Number AT72 AK AR AN 21000000 AM AO AP AQ AS AT AU AV AW LOAN AMOUNT BANQUE DE SORBONNE PROPOSAL YEAR - LIBOR SPREAD INTEREST RATE CHARGED INITIATION FEE 63 64 65 INCREASE OF 0.25% IN LIBOR 0 3.80% 2.50% 6.30% 0.00% 4.05% 2.50% 6.55% 4.30% 2.50% 6.80% 4 4.80% 2.50% 7.30% 4.55% 2.50% 67 68 69 70 71 72 73 74 75 76 21000000 NET FUND RECEIVED INTEREST PAYMENTS 1375500 1428000 1480500 1533000 PRINCIPAL PAYMENT TOTAL CASH FLOWS 1000000 1000000 -1375500 142800014800022533000 ALL IN COST OF FUNDS (IRR)6.9042 (0.25% INCREASE IN LIBOR) % IRR(AN19:AR19) 78 79 80 DECISION BANQUE DE SORBONNE PROPOSAL HAS LOWER COST IN BOTH THE CASES 81 SO BANQUE DE SORBONNE PROPOSAL SHOULD BE SELECTED PE EPS DIVABNORMALAPROSSdeberk MARGIN MONEY marginal tax PB ROPI price quote EVA MVA LEVERAGED BUY SWAP distressBRIGHAN CAP GAIN 25-12-2018

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