What was the total interest charged for this amortization

Assignment Help Financial Management
Reference no: EM13908934

Alice needed capital to expand his business. He borrowed a loan of $20,000,000 from the bank and the load would be compounded monthly at 4.5% p.a. immediately after the loan was incurred.

(a) Alice would repay the load by monthly payments for 10years, for a total of 120 payments.

(i) Compute the monthly payment

(ii) What was the total interest charged for this amortization?

(b)Due to financial reasons, Alice needed to defer the monthly payments. He would pay the first monthly payment starting from the end of the 49th month after the load was incurred.

(i) Calculate the revised monthly payment if Alice would finish paying the loan in 6 years, for a total of 72 payments

(ii) Find the total interest charged for the whole loan.

Reference no: EM13908934

Questions Cloud

There are several different categories of loans : There are several different categories of loans, including pure discount loans, interest-only loans, amortized loans, and balloon loans. What do each of those categories mean and please provide a real-life example of when each could be an appropriate..
Program that performs mathematical operations : Create a batch file program that performs 4 mathematical operations such as addition, subtraction, multiplication and division.
What is after-tax cost of capital for this debt financing : Great Seneca Inc. sells $100 million worth of 20-year to maturity 13.12% annual coupon bonds. The net proceeds (proceeds after flotation costs) are $981 for each $1,000 bond. The firm's marginal tax rate is 40%. What is the after-tax cost of capital ..
What advantage and disadvantages of standardized information : What is standardized information and describe the two types of standardized information? Distinguish between these two types and provide an example of each.
What was the total interest charged for this amortization : Alice needed capital to expand his business. He borrowed a loan of $20,000,000 from the bank and the load would be compounded monthly at 4.5% p.a. immediately after the loan was incurred. Compute the monthly payment. What was the total interest charg..
Show that the new process is reversible : Assuming that the new process (starting in B and remaining in B) is irreducible, show that the new process is reversible and find its steady-state probabilities.
Compute the dealership sales price variance and sales : Compute the dealership's sales price variance and sales volume variance for the first six months of 2013.
Determining the value of any cash flow is the interest rate : We learned that one of the key variables in determining the value of any cash flow is the interest rate (sometimes referred to as discount rate). However, interest rates may be quoted in more than one way. What do the terms EAR and APR mean?
Present value of the hotels terminal value : The recently opened Grand Hyatt Wailea Resort and Spa on Maui cost $600 million, about $800,000 per room, to build. Assume that the $450 million expense of building the hotel can be written off straight line over a 30-year period (the other $150 mill..

Reviews

Write a Review

 

Financial Management Questions & Answers

  Develop analysis of three investments

Using the situation from SLP2, recall that you are deciding between two investments. However, they each require a different initial investment amount. Real estate development. This is a risky opportunity with the possibility of a high payoff, but als..

  Money will be in that account at the end of that time period

Stephen plans to purchase a car 5 years from now. The car will cost $55,339 at that time. Assume that Stephen can earn 5.16 percent (compounded monthly) on his money. How much should he set aside today for the purchase?

  Considering the purchase of crown bakery

You are considering the purchase of crown bakery, inc common stock that just paid a dividend of $3.77 per share. You expect the dividend to grow at a rate of 3.28 percent per year, indefinitely. You estimate that a required rate of return of 10.25 pe..

  Firms stock price fails to meet shareholders expectations

What are some actions an entrenched management might take that would harm shareholders? How is it possible for an employee stock option to be valuable even if the firm’s stock price fails to meet shareholders’ expectations?

  How do you determine if the company has too much liquidity

Defines how solvency and liquidity differ and provides an example of two companies. As a financial manager, what can you do to make sure your company stays solvent and is not too liquid?

  calculation of the debt component of LilyMacs WACC

Suppose that Lily Mac Photography expects EBIT to be approximately $200,000 per year for the foreseeable future, and that it has 1,000 10-years, 9 percent annual coupon bonds outstanding. What would the appropriate tax rate be for use in the calculat..

  What is the value of gold coasts stock

Gold Coast Health System just paid an annual dividend of $1.50, which is expected to grow at a constant rate of 5 percent per year. If the current required rate of return is 15 percent, what is the value of Gold Coast's stock?

  What did these bonds sell for when they were issued

Seven years ago XYZ International issued some 31-year zero-coupon bonds that were priced with a market's required yield to maturity of 12 percent and a par value of $1,000. What did these bonds sell for when they were issued?

  All transactions are cash transactions

The following transactions pertain to 2012, the first-year operations of Hall Company. All inventories was started and completed during 2012. Assume that all transactions are cash transactions. 1. Acquired $4,900 cash by issuing common stock.

  Discuss the differences between customer relationship

write 400ndash600 words that respond to the following questions with your thoughts ideas and comments. this will be the

  An otherwise identical but levered firm

An unlevered firm has a value of $700 million. An otherwise identical but levered firm has $130 million in debt at a 5% interest rate. Its cost of debt is 5% and its unlevered cost of equity is 11%. No growth is expected. Assuming the corporate tax r..

  Limit-order book for share of stock

Consider the following limit-order book for a share of stock. The last trade in the stock occurred at a price of $55. Limit Buy Orders Limit Sell Orders Price Shares Price Shares $ 54.75 500 $ 55.25 200 54.50 400 55.50 200 54.25 500 58.75 300 54.00 2..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd