Question
In: Finance
Assume a coupon of 6%. You borrow $10 million from the bank and you make annual payments over 8 years.
Assume a coupon of 6%. You borrow $10 million from the bank and you make annual payments over 8 years. There is a balloon payment of $1,000,000 at the end of year 8. Determine annual interest and principal payment for each year. Please make sure your answer includes a separate statement as to the exact principal payment in year 8.
Solutions
Expert Solution
Calculation of interest and principle repayment
EMI = [P*R*(1+R)^N]/[(1+R)^(N-1)]
| Year | Principle | Interest | Total repayment |
| Year 1 | 1004291 | 572681 | 1576972 |
| Year 2 | 1066234 | 510738 | 1576972 |
| Year 3 | 1131977 | 444975 | 1576952 |
| Year 4 | 1201816 | 375156 | 1576972 |
| Year 5 | 1275941 | 301031 | 1576972 |
| Year 6 | 1354638 | 222334 | 1576972 |
| Year 7 | 1438189 | 138783 | 1576972 |
| Year 8 | 1526894 | 50078 | 1576972 |
jeff jeffy answered 2 years agoRelated Solutions
Assume a coupon of 6%. You borrow $10 million from the bank and you make annual payments over 8 years.
Assume a coupon of 6%. You borrow $10 million from the bank
and you make annual payments over 8 years. There is a balloon
payment of $1,000,000 at the end of year 8. Determine annual
interest and principal payment for each year. Please make sure your
answer includes a separate statement as to the exact principal
payment in year 8. How to do this in excel?
Assume a coupon of 6%. You borrow $10 million from the bank and you make annual...
Assume a coupon of 6%. You borrow $10 million from the bank and
you make annual payments over 8 years. There is a balloon payment
of $1,000,000 at the end of year 8. Determine annual interest and
principal payment for each year. Please make sure your answer
includes a separate statement as to the exact principal payment in
year 8.
•Assume you borrow from the bank $5,000,000. Assume you make quarterly payments. Further assume that the...
•Assume you borrow from the bank $5,000,000. Assume you make
quarterly payments. Further assume that the stated coupon rate is
9% per annum and the loan matures in 12 years. Determine the
interest and principal payment for year 5.
• Assume you borrow from the bank $5,000,000. Assume you make
quarterly payments. Further assume that the stated coupon rate is
9% per annum and the loan matures in 12 years. You also make a
balloon payment of $1,000,000 in the...
You borrow $100,000 and make annual payments for 5 years. The interest rate is 8%. How...
You borrow $100,000 and make annual payments for 5 years. The
interest rate is 8%. How much interest do you pay in year 2?
PLEASE EXPLAIN STEP BY STEP HOW YOU SOLVE WITH ONLY YOUR
FINANCIAL CALCULATOR
Consider two bonds, both with 8% coupon rates (assume annual coupon payments) one with 10 years...
Consider two bonds, both with 8% coupon rates (assume
annual coupon payments) one with 10 years to
maturity and the other with 20 years to maturity. Assume that
current market rates of interest are 8%. Calculate the
difference in the change of the price of the two
bonds if interest rates decrease to 6% one year after
purchasing the bond. Repeat the procedure assuming
that interest rates increase to 10% one year after purchase.
Explain the major bond pricing principle...
Consider two bonds, both with 8% coupon rates (assume annual coupon payments) one with 10 years...
Consider two bonds, both with 8% coupon rates (assume annual
coupon payments) one with 10 years to maturity and the other with
20 years to maturity. Assume that current market rates of interest
are 8%. Calculate the difference in the change of the price of the
two bonds if interest rates decrease to 6% one year after
purchasing the bond. Repeat the procedure assuming that interest
rates increase to 10% one year after purchase. Explain the major
bond pricing principle...
Bond A is a 6 % coupon bond and makes annual payments with 10 years to...
Bond A is a 6 % coupon bond and makes annual payments with 10
years to maturity. Bond B is a 6% coupon bond and makes annual
payments with 20 years to maturity. Both bonds have a market
required return of 10% and face value of 1,000.
b) What will happen to the prices of both bonds if the interest
rate increases by 2%? Explain
Assume that you borrow $15,000 for five years (annual payments) at a market rate of 5%....
Assume that you borrow $15,000 for five years (annual payments)
at a market rate of 5%. Assuming that inflation is 3.5%, what would
the equivalent equal annual payment be in constant dollars?
If you borrow $26,000 with monthly payments of $550 over 5 years, what annual rate are...
If you borrow $26,000 with monthly payments of $550 over 5
years, what annual rate are you paying?
A. 8.18% B.
8.41%
C. 9.81%
D. 8.51%
7. You borrow $35,000 today and will make equal annual payments for the next 3 years,...
7. You borrow $35,000 today and will make equal annual payments
for the next 3 years,
starting in 1 year.
a. What is the value of the annual payment if the nominal
interest on the loan is:
9.50%
Payment
b. Show the amortization of the loan in the table set up
below:
Year
Beg. Balance
Payment
Interest
Principal
Ending Balance
1
2
3
TOTAL
Excel function or formula answer please
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