Your company is planning to borrow $1.5 million on a 7-year, 8%, annual payment, fully amortized term loan. What fraction of the payment made at the end of the second year will represent repayment of principal? Round your answer to two decimal places.
Your company is planning to borrow $1.5 million on a 7-year, 8%, annual payment, fully amortized term loan. What fraction of the payment made at the end of the second year will represent repayment of principal? Round your answer to two decimal places.
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Related questions
Wolfson Corporation has decided to purchase a new machine that costs $3.3 million. The machine will be depreciated on a straight-line basis and will be worthless after four years. The corporate tax rate is 30 percent. The Sur Bank has offered Wolfson a four-year loan for $3.3 million. The repayment schedule is four yearly principal repayments of $825,000 and an interest charge of 8 percent on the outstanding balance of the loan at the beginning of each year. Both principal repayments and interest are due at the end of each year. Cal Leasing Corporation offers to lease the same machine to Wolfson. Lease payments of $975,000 per year are due at the beginning of each of the four years of the lease.
a. | What is the NAL of leasing for Wolfson? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
NAL | $ |
b. | What is the maximum annual lease payment Wolfson would be willing to pay? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
Annual lease payment | $ |
Prepare an amortization schedule for a five-year loan of $61,000. The interest rate is 8 percent per year, and the loan calls for equal annual payments. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) |
Year | Beginning Balance | Total Payment | Interest Payment | Principal Payment | Ending Balance |
1 | $ | $ | $ | $ | $ |
2 | |||||
3 | |||||
4 | |||||
5 | |||||
How much interest is paid in the third year? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) |
Interest paid | $ |
The interest rate is 8 percent per year, and the loan calls for equal annual payments. How much total interest is paid over the life of the loan? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) |
Total interest paid | $ |