Question

please write in text not in handwriting since its hard to read from a paper pic and i need an explanation for each problem thank you

1 SONY needs $24,034,142 for a new sound studio facility to be constructed 10 years from now. The company currently has $5,000,000 to invest in such capital expenditures. At what rate of interest must it invest the $5,000,000 to fund construction of the new facility? (Round to the nearest whole percentage

2. Prepare an amortization schedule for a 5-year loan of $87,000. The interest rate is 7% with equal monthly payments How much interest is paid during the first year?

Answer 1

1.

Amount required after 10 years is $24,034,142.

Amount available now $5,000,000.

The below expression can be used to calculate interest rate.

Interest should be 17%.

2.

Monthly repayment should be calculated first by using goal seek function in excel. Take a hypothetical value of monthly payment be 1500.

The formula working in excel is shown below:

The calculation results are shown below:

The balance after 60th payment should be zero. So, change the monthly payment and calculate the correct payment by using goal seek function.

Set last cell (E65) at 0 by changing cell B3.

Go to data tab and click on what-if analysis and select goal seek.

The correct schedule is shown below:

check the last value for 0.

To calculate the total interest paid in first year, sum up all interest on balance values from 1 to 12th month.