part D E F Furniture Land are extending one of their warehouses and will borrow$120,000 for building costs. They decide to take out an interest only loanthat charges a rate of 4.5% p.a. compounding monthly. Show your workingfor this question.KOOK (a) Calculate the amount of interest charged each month.(b) How much money will the company owe after 1 year?13 of 13Furniture Land change their interest only loan to a reducing balance loanand increase their monthly payment to $1700. Their interest rate of 4.5%p.a. compounding monthly stays the same.(c) How long, to the nearest year, will it take to pay off the loan?(d) What is the amount outstanding after 5 years? Write your answer to 2decimal places.(e) If the interest rate increases to 9% p.a., how much money will they haveto pay each month to pay off the loan in 5 years?(f) What would be the total cost of the loan if Furniture Land continued Lpaying this monthly payment for 5 full years?

interest rate per compounding =4.5/12=0.375% Loan amount=120000

Furniture Land are extending one of their warehouses and will borrow $120,000 for building costs. They decide to take out an interest only loan that charges a rate of 4.5% p.a. compounding monthly. Show your working for this question.

Furniture Land are extending one of their warehouses and will borrow $120,000 for building costs. They decide to take out an interest only loan that charges a rate of 4.5% p.a. compounding monthly. Show your working for this question.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter22: Providing And Obtaining Credit

Section: Chapter Questions

Problem 2P: Cost of Bank Loan Mary Jones recently obtained an equipment loan from a local bank. The loan is for...

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