2) A bank lends money to a firm on 01/01/2010. According to the lending agreement, the...

2) A bank lends money to a firm on 01/01/2010. According to the lending agreement, the bank will receive the following payments:

06/30/2010 - $2,300,000

12/31/2010 - $1,300,000

06/30/2011 - $5,700,000

12/31/2011 - $3,400,000

06/30/2012 - $360,000

12/31/2012 - $560,000

If the annual interest rate on the loan is 3.80%, how much did the firm borrow?

Solutions

Expert Solution

The Present value of all half yearly payment at discount rate would be equal to value of firm borrow amount.

Please refer below spreadsheets for calculations and answer, formula reference also provided for better understanding of calculations.

Formula reference -

Thus, Borrow amount is $ 12,877,441.88 (rounded to two decimal)

jeff jeffy answered 1 year ago

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