Present Value 5. Casino.com Corporation is building a $25 mil- lion office build
ID: 2805210 • Letter: P
Question
Present Value 5. Casino.com Corporation is building a $25 mil- lion office building in Las Vegas and is financ- ing the construction at an 80 percent loan-to- value ratio, where the loan is in the amount of $20,000,000. This loan has a ten-year maturity calls for monthly payments, and has a statecd interest rate of 8 percent. Should this loan be refinanced after three years with a new seven-year 7 percent loan, if the cost to refinance is $250,000? To make this decision, calculate the new loan payments and then the pres- ent value of the difference in the loan 6. Returning to the original ten-year 8 per- cent loan, how much is the loan pay- ment if these payments are quarterly rather than monthly payments? Using the above information, answer the fol- lowing questions. 7. For this loan with quarterly payments, how much will Casino.com Corporation owe on this loan after making quarterly payments for three years? (the amount 3. How much of the first payment is od immediately after the twelfth 1. 2. What is the monthly payment? How much of the first payment is interest? principal? How much will Casino.com Corporation owe on this loan after making monthly the original ten-year 8 percent loan? payments for three years? (the amount 9. What is the effective annual rate (EAR) on owed immediately after the thirty-sixth the original ten-year 8 percent loan? payment) payment) 4. 8. What is the annual percentage rate onExplanation / Answer
We are supposed to solve first 4 subparts whne multiple are posted
a)use pmt formuale in excel to find this
=pmt(rate,nper,pv,fv,type)
=pmt(8%/12,10*12,20000000,0,0)
=242655.19
b) interest component=20000000*8%/12=133333.33
c) Principal componnent=monthly payment-interest componnent
=242655.19-133333.33
=109321.86
d)for 3 years the total principal paid can be found using cumprinc formuale in excel
=cumprinc(rate,nper,pv,start,end,type)
=CUMPRINC(8%/12,10*12,20000000,1,36,0)
=4431422.38 and this is the principal paid and the left is
=20000000-4431422.38
=15,568,577.62