Loan 25,000,000

Contract rate 7.25% Actual interest

YTM
N 5
PMT 1,812,500
PV - 25,000,000
FV 27,500,000
Comp I/Y 8.92% 24J requires the issuer to deduct deemed interest calculated using
Armt p1 Armt p2
24J interest 2,230,869 2,268,202
0 1 2
Loan amount 25,000,000
Transaction costs - 750,000
Tax on transaction costs 0
Interest payments - 1,812,500 - 1,812,500
Tax on interest 602,335 612,415
Loan amount

Net cash flows 24,250,000 - 1,210,165 - 1,200,085

Effective after cost of debt 7.23%
deemed interest calculated using YTM
Armt p3 Armt p4 Armt p5
2,308,866 2,353,159 2,401,405
3 4 5

- 1,812,500 - 1,812,500 - 1,812,500

623,394 635,353 648,379
- 27,500,000

- 1,189,106 - 1,177,147 - 28,664,121