Loan Subsidy Valuation

Peter Jennergren

No 2004:8, SSE/EFI Working Paper Series in Business Administration from Stockholm School of Economics

Abstract: Loan subsidies are sometimes offered in connection with investment projects. It is convenient to view such subsidies as financing side effects providing value additions to project net present values without loan subsidies. A number of different methods for loan subsidy valuation have been suggested in the literature and by project appraisal practice. Four methods are outlined and applied to a subsidized loan example taken from a prominent text book. A combination of two of those methods is recommended for practical applications. The other two methods are not recommended.

Keywords: Subsidized loans; valuation; tax shields (search for similar items in EconPapers)
Pages: 16 pages
Date: 2004-05-25
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Citations: View citations in EconPapers (1)

Published in The Engineering Economist, 2005, pages 69-86.

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Persistent link: https://EconPapers.repec.org/RePEc:hhb:hastba:2004_008

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