Question 8.1: Lim Associates plc issues £20 million loan capital on which ...

Financial Management for Decision Makers

Lim Associates plc issues £20 million loan capital on which it pays an annual rate of interest of 10 per cent on the nominal value. The issue price of the loan capital is £88 per £100 nominal value and the tax rate is 20 per cent. The loan capital is due to be redeemed in four years’ time at its nominal value.
What are the annual cash flows for this issue?

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