Reference no: EM131169438
ACME Corporation constructed a small office building for their firm 5 years ago. They financed it with a bank loan for $450,000 over 15 years at 6% interest with quarterly payments and quarterly compounding. The loan can be repaid at any time without penalty.
a) How much does ACME pay per quarter on this loan?
b) ACME is preparing to make their 23rd loan payment. Hoe much will they pay in interst and principal on this payment (directly calculate these values, do not create the entire loan schedule)?
c) What is the otal amount of interest at ACME will pay on this loan?
d) Interest rates have decreases since ACME secured this financing and since there is no penalty for repaying the deby early, ACME is considering refinancing their remaining debt after maing the 23rd payment. They found that the loan can be refinanced for 4% over 20 years - stil with quarterly compounding and payments. The new loan has a 5% loan initiation fee(balance transfer fee), which will be added to the new loan. What will be ACME's new quarterly loan payment withthe refinanced loan?
e) What is the difference in total interest that ACME would pay if they refinanced compared to staying wit the original loan terms?
f) Consider these two options (the original loan terms or refinancing after the 23rd payment) and briefly discuss some factors that ACME should cnsider when deciding whether or not they should refinance the loan?
Bridge has maintenance costs
: A bridge has maintenance costs of $80,000 now, $100,000 seven years from now, and annual costs of $10,000 per year starting in year 10 and lasting forever. What is the equivalent annual cost if the interest rate is 10% per year?
|
Which affect the demand for goods and services
: What are some of the factors which affect the demand for goods and services? What happens to the demand for a good when each of these factors decreases? The market for hotdogs is currently in market equilibrium (Supply = Demand).Using Demand and Supp..
|
Aggregate expenditures model
: Which of the following statements describes the main idea behind Keynes's aggregate expenditures model?
|
Intersted in starting scholarship fund
: Your school is intersted in starting a scholarship fund. Each scholarship will be $500 and they anticipate funding 10 students each year. All scholarships are awarded at end of year. The organization plans to provide a total of 50 scholarships, with ..
|
How much does ACME pay per quarter on loan
: ACME Corporation constructed a small office building for their firm 5 years ago. They financed it with a bank loan for $450,000 over 15 years at 6% interest with quarterly payments and quarterly compounding. The loan can be repaid at any time without..
|
Unskilled workers than jobs at decent wages
: The Economist described the plight of the unskilled worker in the rich world. "In America the problem takes the form of poverty wages, in Europe of unemployment. The underlying cause appears to be the same. There are more unskilled workers than jobs ..
|
What is the equivalent annual cost if the interest rate
: A bridge has maintenance costs of $70,000 now, $100,000 seven years from now, and annual costs of $10,000 per year starting in year 10 and lasting forever. What is the equivalent annual cost if the interest rate is 10% per year?
|
In the aggregate expenditures model
: In the aggregate expenditures model, it is assumed that:
|
Aniticipate making single lump sum investment
: Your employer has anticipated needing $60,000 in 2.5 years to finance the purchase of new machine. If they aniticipate making a single lump sum investment today into a savings account that will return 12% interest compounded continuously, how much mo..
|