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. How to do this in excel?

Solutions

Expert Solution

p=$10000000

r= 6%

n = year

Interset = (p*r*(1+r)^n)/(1+r)^(n-1)

Year Principle Interest Total repayment
1.00 10000000.00 636000.00 10636000.00
2.00 9364000.00 595550.40 9959550.40
3.00 8768449.60 557673.39 9326122.99
4.00 8210776.21 522205.37 8732981.57
5.00 7688570.84 488993.11 8177563.94
6.00 7199577.73 457893.14 7657470.88
7.00 6741684.59 428771.14 7170455.73
8.00 6312913.45 401501.30 6714414.75


Total Repayment = Principle+ Interest


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