Can you please solve H-3 N. 1-3 with a detailed explanation? Thank you! Green La
ID: 2471012 • Letter: C
Question
Can you please solve H-3 N. 1-3 with a detailed explanation? Thank you!
Green Land Corporation's CFO has requested your assistance with the following: 1. How much money can be bomowed if GLC is able to make 15 annual payments (end of year) of $100,000 based on an annual interest of 8%? 2. GLC plans to borrow $50 million to finance a new hotel. If the annual interest rate is and the term of the loan is 30 years, what is the annual payment? Over the life of the loan, how much interest will be paid? 3. Same facts as in part 2, except assume the term of the loan is 15 years. What is the annual payment and how much interest will be paid over the life of the loan?Explanation / Answer
=100,000 * 24.215 = $2,421,500 2) Loan amount = $50 million Interest = 8% Term = 30 years Total loan payment = (Amount/term) * FVIAF @ 8% 30 years = (50/30) * 113.283 =188.805 million Annual payment = 188.805/30 = 6.2935 million Total Interest = 188.805-50 = 138.805 million 3) Loan amount = $50 million Interest = 8% Term = 15 years Total loan payment = (Amount/term) * FVIAF @ 8% 15 years = (50/15) * 27.152 =90.51 million Annual payment = 90.51/15 = 6.03 million Total Interest = 90.51-50 = 40.51 million