Question

Your company has the following debt maturity situation: $20 million in month N8 $60 million in month N15 You want to renegotiate said maturity by paying $14 million in month N11 and a value to be determined in month N13 Use a market rate of 14.5% nominal annual convertible A focal date in month N12 Calculate the value in month N13 Use all decimals

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Answer to a math question Your company has the following debt maturity situation: $20 million in month N8 $60 million in month N15 You want to renegotiate said maturity by paying $14 million in month N11 and a value to be determined in month N13 Use a market rate of 14.5% nominal annual convertible A focal date in month N12 Calculate the value in month N13 Use all decimals

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Hermann
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126 Answers
1. Present the debts and payments to the focal date (month N12) using the market rate of 14.5% nominal annual.

2. Debt in month N8 to N12: \text{Amount in N12 from N8} = 20 \times \left(1 + \frac{0.145}{12}\right)^{4}

3. Debt in month N15 to N12: \text{Amount in N12 from N15} = 60 \times \left(1 + \frac{0.145}{12}\right)^{-3}

4. Payment in month N11 to N12: \text{Amount in N12 from N11} = 14 \times \left(1 + \frac{0.145}{12}\right)^{1}

5. Payment in month N13 to N12: Let it be \( X \). So, the present value is: X \times \left(1 + \frac{0.145}{12}\right)^{-1}

6. Set the equation to equate present values of debts and payments at month N12:

20 \times \left(1 + \frac{0.145}{12}\right)^{4} + 60 \times \left(1 + \frac{0.145}{12}\right)^{-3} = 14 \times \left(1 + \frac{0.145}{12}\right)^{1} + X \times \left(1 + \frac{0.145}{12}\right)^{-1}

7. Solve the equation for \( X \) to find the payment in month N13:

X = \frac{ \left(20 \times \left(1 + \frac{0.145}{12}\right)^{4} + 60 \times \left(1 + \frac{0.145}{12}\right)^{-3} - 14 \times \left(1 + \frac{0.145}{12}\right)^{1}\right) }{ \left(1 + \frac{0.145}{12}\right)^{-1}}

8. Compute \( X \) to get the value in month N13.

Answer: X = 65.4733764 \text{ million}

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