a) A bank made a 4-year 12% amortizing $2,500,000 loan with equal payments. What is the amount of interest and principal paid at the end of the 3rd year? What is the balance on the loan at the end of the 3rd year? b) Assume instead the bank demands that the borrower pay interest only for the first two years and then principal payments of $1,250,000 in years 3 and 4. What is the amount of interest and principal paid at the end of the 3rd year? What is the balance on the loan at the end of the 3rd year? Assume the same 12% rate of interest.

a) A bank made a 4-year 12% amortizing $2,500,000 loan with equal payments. What is the amount of interest and principal paid at the end of the 3rd year? What is the balance on the loan at the end of the 3rd year? b) Assume instead the bank demands that the borrower pay interest only for the first two years and then principal payments of $1,250,000 in years 3 and 4. What is the amount of interest and principal paid at the end of the 3rd year? What is the balance on the loan at the end of the 3rd year? Assume the same 12% rate of interest.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 17P

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