Requires company to make monthly interest-only payments

Assignment Help Financial Management

Reference no: EM131348567

A company borrows $81000 at 12% simple interest from State Bank to purchase equipment. State Bank requires the company to make monthly interest-only payments and pay the full $81000 at the end of 5 years. In order to meet the 5 year obligation of $81000,the company makes equal deposits at the end of each month into a sinking fund with Wolf Savings. The sinking fund earns 6% compounded monthly. Note: This problem is set to allow for an answer of a specific tolerance. Be careful in your rounding. You may get some answers correct but not be in the range of answers for the others.

a. State the monthly interest payment to State Bank (rounded normally to the next cent).

b. State the amount of the equal monthly deposits to Wolf Savings, rounded normally to the next cent.

c. State the sinking fund balance at the end of 3 years. $

d. State the total amount of interest earned on the sinking fund at the end of 3 years. $

Reference no: EM131348567

Questions Cloud

Briefly describe the industry market for your organisation : Briefly describe the industry market for your organisation and evaluate current trends in: Growth and Profitability. Macro environment (PESTLE factor). Please place PESTLE in an appendix, it will not count as part of your word count

Appropriate to determine the return on a stock : A researcher has determined that a two-factor model is appropriate to determine the return on a stock. The factors are the percentage change in GNP and an interest rate. If the expected rate of return on the stock is 13 percent, what is the revised e..

Specialize in the production of the good : Nettie can produce either 8 cupcakes or 4 hamburgers. Becky can produce either 4 cupcakes or 8 hamburgers. Suppose that Nettie and Becky each specialize in the production of the good for which they have a comparative advantage and decide to trade...

Determine the percent mass flow of steam : Determine the percent mass flow of steam extracted from the turbine.- The turbine power output per unit mass flow of steam.

Requires company to make monthly interest-only payments : A company borrows $81000 at 12% simple interest from State Bank to purchase equipment. State Bank requires the company to make monthly interest-only payments and pay the full $81000 at the end of 5 years. State the monthly interest payment to State B..

Determine the percent mass flow of steam : Determine the percent mass flow of steam extracted from the turbine.- The turbine power output per unit mass flow of steam.

Result in an increase in the wage rate : Which of the following scenarios would result in an increase in the wage rate of solar panel installers and a decrease in the quantity of solar panel installers employed in Billy's town?

Explain the implications of marginal cost pricing : Explain the implications of marginal cost pricing and average cost pricing. Why are these important results in a purely competitive industry? Explain.

What before tax annual payment stream : After 10 years of marriage, Ashley and Charles have decided to separate. Charles will take the custody of the children and will stay home for the next 8 years. What are their after taxes rates of return? Ashley offers a lump sum of $150,000. What bef..

User Account

All Pages