Answered: e size of the monthly payments required…

e size of the monthly payments required to settle this loan? 2. What is the principal balance outstanding on the loan after one year? 3. What is the size of the final payment?

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter10: Project Cash Flows And Risk

Section: Chapter Questions

Problem 1PROB

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Question

Owners of a new restaurant have found numerous costs associated with starting their business (see table). They financed the total of these costs with end-of-month payments through a loan from the bank at {E}compounded {F}, amortized over {G} years.

1. What is the size of the monthly payments required to settle this loan?

2. What is the principal balance outstanding on the loan after one year?

3. What is the size of the final payment?

4. Construct a partial amortization schedule for this loan.

$99,000.00
$8,880.00
Cost of Goods Sold
{A}
Equipment
{B}
$1,000.00
$1,255.00
Renovations
{C}
Other
{D}
Financing interest rate
{E}
6.76%
semi-annually
Compounding periods per year (CY)
Length of amortization (years)
Savings/Surplus
{F}
{G}
10
$123,750.00
$445,500.00
{H}
Property and vehicle cost
Mortgage rate
Term of mortgage
{I}
{J}
5.4%
{K}
13
Bond face value
{L}
$136,125.00
Time until maturity
{M}
{N}
9.
Bond rate
2.0%

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