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A company borrows $174,900 from a bank. The interest rate on the loan is 6 percent compounded semiannualy. The company agrees to repay the loan in equal semiannualy installments over the next five years. The first payment is to be made six months from now. (Use factor table in Appendix B for calculation) Required 1: What is the amount of each semiannual payment? $ Required 2: In the first payment, what is the amount of interest cancelled? $ Required 3: In the fifth payment, what is the amount of loan paid net of interest? $

A company borrows $174,900 from a bank. The interest rate on the loan is 6 percent compounded semiannualy. The company agrees to repay the loan in equal semiannualy installments over the next five years. The first payment is to be made six months from now. (Use factor table in Appendix B for calculation) Required 1: What is the amount of each semiannual payment? $ Required 2: In the first payment, what is the amount of interest cancelled? $ Required 3: In the fifth payment, what is the amount of loan paid net of interest? $

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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A company borrows $174,900 from a bank. The interest rate on the loan is 6 percent compounded semiannualy. The company agrees to repay the loan in equal semiannualy installments over the next five years. The first payment is to be made six months from now. (Use factor table in Appendix B for calculation)

Required 1: What is the amount of each semiannual payment?  $ 

Required 2: In the first payment, what is the amount of interest cancelled?  $ 

Required 3: In the fifth payment, what is the amount of loan paid net of interest?  $ 

Required 4: In the last payment, what is the amount of interest cancelled?  $ 

Required 5: Assume the debt contract has the option to make one extraordinary payment of up to 20% of the principal. If the company decides to exercise the right and make the extra payment together with the 8th payment, how much it must pay in dollars at the 9th payment to pay off the loan?  $ 

 

Present Value of $1 n 1% 1 0.9901 2 0.9803 3 0.9706 4 2% 5% 6% 7% 8% 9% 10% 11% 0.9259 0.9174 0.9091 0.9009 0.8264 0.8116 6 0.9420 0.5346 7 3% 4% 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 0.9612 0.9426 0.9246 0.9070 0.8900 0.8734 0.8573 0.8417 0.9423 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7312 0.9610 0.9238 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6587 5 0.9515 0.9057 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5935 0.8880 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.8706 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4817 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4339 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3909 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3522 0.6496 0.5847 0.5268 0.4751 0.4289 0.3875 0.3505 0.3173 0.4440 0.3971 0.3555 0.4150 0.3677 0.3262 0.3878 0.3405 0.2992 0.9327 8 0.9235 0.8535 0.7894 0.7664 0.7026 10 0.7441 0.6756 11 0.8963 0.7224 12 0.8874 0.7014 0.6246 0.3186 0.2858 0.5568 0.4970 0.5303 0.4688 13 0.8787 0.2575 0.2897 0.2633 0.2320 14 0.8700 0.5051 0.3624 0.3152 0.2745 0.2394 0.2090 0.3387 0.2919 0.2519 0.2176 0.1883 0.4423 0.6419 0.5553 0.4810 0.4173 0.6232 0.5339 0.4581 0.3936 0.6050 0.5134 0.4363 0.3714 0.5874 0.4936 04155 0.3503 0.5703 0,4746 0.3957 0,3305 0.4564 0.2703 0.1978 0.1696 0.1799 0.1528 0.6864 15 0.8613 0.7430 16 0.8528 0.7284 17 0.8444 0.7142 18 0.8360 0.7002 19 0,8277 20 0.8195 21 0.8114 0.8034 23 0.7954 24 0.7876 25 0.7798 0.1945 0.1635 0.1377 0.6730 0.5537 0.3166 0.2959 0.2502 0.2765 0.2317 0.3769 0.3118 0.2584 0.2145 0.1784 0.1486 0.1240 0.3589 0.2942 0.2415 0.1987 0.1637 0,1351 0.1117 0.3418 0.2775 0.2257 0.1502 0.3256 0.2618 0.2109 0.1378 0.3101 0.2470 0.1971 0.6598 0.5375 0.4388 0.6468 0.5219 0.4220 0.1839 0.1228 0.1007 0.6342 0.5067 0.4057 0.1703 0.1117 0.0907 0.1577 0.1264 0.1015 0.0817 0.6217 0.4919 0.3901 0.6095 0.4776 0.3751 0.2953 0.2330 0.1842 0.1460 0.1160 0.0923 0.0736 9 PV = P(1+r)" r= interest rate; n = number of periods; P = $1 222222 0.9143 0.9053 0.8368 0.8203 0.8043 0.7885 0.7730 0.6810 0.6006 0.7579 0.6611 0.5775 0.2311 0.2120 12% 0.8929 0.7972 0.7118 0.6355 0.5674 0.5066 0.4523 0.4039 0.3606 0.3220 0.2875 0.2567 0.2292 0.2046 0.1827 0.1631 0.1456 0.1300 0.1161 0.1037 0.0926 0.0826 0.0738 0.0659 0.0588 15% 0.8696 0.7561 0.6575 0.5718 0.4972 0.4323 0.3759 0.3269 0.2843 0.2472 0.2149 0.1869 0.1625 0.1413 0.1229 0.1069 0.0929 0.0808 0.0703 0.0611 0.0531 0.0462 0.0402 0.0349 0.0304
Transcribed Image Text:Present Value of $1 n 1% 1 0.9901 2 0.9803 3 0.9706 4 2% 5% 6% 7% 8% 9% 10% 11% 0.9259 0.9174 0.9091 0.9009 0.8264 0.8116 6 0.9420 0.5346 7 3% 4% 0.9804 0.9709 0.9615 0.9524 0.9434 0.9346 0.9612 0.9426 0.9246 0.9070 0.8900 0.8734 0.8573 0.8417 0.9423 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7312 0.9610 0.9238 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6587 5 0.9515 0.9057 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5935 0.8880 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.8706 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4817 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4339 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3909 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3522 0.6496 0.5847 0.5268 0.4751 0.4289 0.3875 0.3505 0.3173 0.4440 0.3971 0.3555 0.4150 0.3677 0.3262 0.3878 0.3405 0.2992 0.9327 8 0.9235 0.8535 0.7894 0.7664 0.7026 10 0.7441 0.6756 11 0.8963 0.7224 12 0.8874 0.7014 0.6246 0.3186 0.2858 0.5568 0.4970 0.5303 0.4688 13 0.8787 0.2575 0.2897 0.2633 0.2320 14 0.8700 0.5051 0.3624 0.3152 0.2745 0.2394 0.2090 0.3387 0.2919 0.2519 0.2176 0.1883 0.4423 0.6419 0.5553 0.4810 0.4173 0.6232 0.5339 0.4581 0.3936 0.6050 0.5134 0.4363 0.3714 0.5874 0.4936 04155 0.3503 0.5703 0,4746 0.3957 0,3305 0.4564 0.2703 0.1978 0.1696 0.1799 0.1528 0.6864 15 0.8613 0.7430 16 0.8528 0.7284 17 0.8444 0.7142 18 0.8360 0.7002 19 0,8277 20 0.8195 21 0.8114 0.8034 23 0.7954 24 0.7876 25 0.7798 0.1945 0.1635 0.1377 0.6730 0.5537 0.3166 0.2959 0.2502 0.2765 0.2317 0.3769 0.3118 0.2584 0.2145 0.1784 0.1486 0.1240 0.3589 0.2942 0.2415 0.1987 0.1637 0,1351 0.1117 0.3418 0.2775 0.2257 0.1502 0.3256 0.2618 0.2109 0.1378 0.3101 0.2470 0.1971 0.6598 0.5375 0.4388 0.6468 0.5219 0.4220 0.1839 0.1228 0.1007 0.6342 0.5067 0.4057 0.1703 0.1117 0.0907 0.1577 0.1264 0.1015 0.0817 0.6217 0.4919 0.3901 0.6095 0.4776 0.3751 0.2953 0.2330 0.1842 0.1460 0.1160 0.0923 0.0736 9 PV = P(1+r)" r= interest rate; n = number of periods; P = $1 222222 0.9143 0.9053 0.8368 0.8203 0.8043 0.7885 0.7730 0.6810 0.6006 0.7579 0.6611 0.5775 0.2311 0.2120 12% 0.8929 0.7972 0.7118 0.6355 0.5674 0.5066 0.4523 0.4039 0.3606 0.3220 0.2875 0.2567 0.2292 0.2046 0.1827 0.1631 0.1456 0.1300 0.1161 0.1037 0.0926 0.0826 0.0738 0.0659 0.0588 15% 0.8696 0.7561 0.6575 0.5718 0.4972 0.4323 0.3759 0.3269 0.2843 0.2472 0.2149 0.1869 0.1625 0.1413 0.1229 0.1069 0.0929 0.0808 0.0703 0.0611 0.0531 0.0462 0.0402 0.0349 0.0304
Future Value of $1 n 1 2 3 4 1.0406 1.0510 1% 4% 1.0100 1.0400 1.0201 1.0816 1.0303 1.0612 1.1249 1.0927 1.1255 1.1699 1.0824 1.1041 1.1593 1.2167 1.1262 1.1941 1.2653 1.1487 1.2299 1.3159 1.3686 1.1717 1.2668 1.1951 1.3048 1.4233 1.2190 1.3439 1.4802 1.2434 1.3842 1.5396 1,2682 1.4258 1.6010 1.2936 1.4685 1.6651 1.3195 1.5126 1.7317 1.1610 1.3459 1.5580 1,8009 1.1726 1.3728 1.6047 1,4002 1.6528 1.1843 1.1961 1.4282 1.2081 1.4568 1.2202 1.4859 1.2324 1.5157 1.2447 1.5460 1.5769 1.6084 1.6406 5 6 1.0615 7 1.0721 8 1.0829 9 1.0937 10 1.1046 11 1.1157 12 1.1268 13 1.1381 14 1.1495 15 16 17 18 19 20 21 22 23 24 25 1.2572 1.2697 2% 3% 1,0200 1.0300 1.0404 1.0609 1.2824 FV = P(1+r)" r = interest rate; n = number of periods; P = $1 1.8730 1.9479 1.7024 2.0258 1.7535 2.1068 1.8061 2.1911 1.8603 2.2788 1.9161 2.3699 1.9736 2.4647 2.0328 2.5633 2.0938 2.6658 5% 1.0500 1.1025 1.1576 1.2155 1.2763 1,3401 1.4071 1.4775 1.5513 1.6289 2.6533 2.7860 6% 7% 1.0600 1.0700 1.1236 1.1449 1.2250 1.2597 1.3108 1.3605 1.4026 1.4693 1.4185 1.5007 1.5869 1.5036 1.6058 1.7138 1.5938. 1.7182 1.8509 1.6895 1.9990 1.7908 2.1589 1.8983 2,1049 2.3316 1.7103 1.7959 2.0122 2.2522 2.5182 1.8856 2.1329 2.4098 2.7196 1.9799 2.2609 2.5785 2.9372 2.3966 2.7590 2.9522 2.0789 2.1829 2.5404 2.2920 2.6928 3,1588 2.4066 2.8543 3.3799 2.5270 3.0256 2.9253 3.0715 1.1910 1.2625 1.3382 3.2071 3.3996 1.8385 1.9672 3,6165 3.8697 4.1406 4.4304 8% 1.0800 1.1664 9% 10% 11% 1.0900 1.1000 1.1100 1.1200 1.1881 1.2100 1.2321 1.2544 1,2950 1.3310 1.3676 1.4049 1.4116 1.4641 1.5181 1.5735 1.5386 1.6851 1.7623 1.6105 1.6771 1.7716 1.8704 1.9738 1.9487 2.0762 2,2107 2.1436 2.3045 2.4760 2.3579 2.5580 2.7731 2.5937 2.8394 3.1058 2.8531 3.1518 3.4785 3.4985 2.8127 3.1384 3.0658 3,4523 3.3417 3.7975 3.8833 4.3104 4.1772 4.7846 4.5950 5.3109 3.1722 3.6425 3.4259 3.9703 3.7000 4.3276 3.9960 4.7171 5.1417 5.6044 6.7275 5.0545 5.8951 5.5599 6.5436 6.1159 7.2633 8.0623 4.3157 4.6610 6.1088 7.4002 8.9492 10.8038 6.6586 8.1403 9.9336 12.1003 7.2579 8.9543 11.0263 13.5523 7.9111 9.8497 12.2392 15.1786 8.6231 10.8347 13.5855 17.0001 3.6035 3.8197 4.7405 4.0489 5.0724 5.0338 5.4365 5.8715 6.3412 3.2251 3.3864 4.2919 5.4274 6.8485 12% 1.8280 1.9926 2.1719 2.3674 2.5804 3.8960 4.3635 4.8871 5.4736 6.1304 6.8660 7,6900 8.6128 9.6463 15% 1.1500 1.3225 1.5209 1.7490 2.0114 2.3131 2.6600 3.0590 3.5179 4.0456 4.6524 5.3503 6.1528 7.0757 8.1371 9.3576 10.7613 12.3755 14.2318 16.3665 18.8215 21.6447 24.8915 28.6252 32.9190
Transcribed Image Text:Future Value of $1 n 1 2 3 4 1.0406 1.0510 1% 4% 1.0100 1.0400 1.0201 1.0816 1.0303 1.0612 1.1249 1.0927 1.1255 1.1699 1.0824 1.1041 1.1593 1.2167 1.1262 1.1941 1.2653 1.1487 1.2299 1.3159 1.3686 1.1717 1.2668 1.1951 1.3048 1.4233 1.2190 1.3439 1.4802 1.2434 1.3842 1.5396 1,2682 1.4258 1.6010 1.2936 1.4685 1.6651 1.3195 1.5126 1.7317 1.1610 1.3459 1.5580 1,8009 1.1726 1.3728 1.6047 1,4002 1.6528 1.1843 1.1961 1.4282 1.2081 1.4568 1.2202 1.4859 1.2324 1.5157 1.2447 1.5460 1.5769 1.6084 1.6406 5 6 1.0615 7 1.0721 8 1.0829 9 1.0937 10 1.1046 11 1.1157 12 1.1268 13 1.1381 14 1.1495 15 16 17 18 19 20 21 22 23 24 25 1.2572 1.2697 2% 3% 1,0200 1.0300 1.0404 1.0609 1.2824 FV = P(1+r)" r = interest rate; n = number of periods; P = $1 1.8730 1.9479 1.7024 2.0258 1.7535 2.1068 1.8061 2.1911 1.8603 2.2788 1.9161 2.3699 1.9736 2.4647 2.0328 2.5633 2.0938 2.6658 5% 1.0500 1.1025 1.1576 1.2155 1.2763 1,3401 1.4071 1.4775 1.5513 1.6289 2.6533 2.7860 6% 7% 1.0600 1.0700 1.1236 1.1449 1.2250 1.2597 1.3108 1.3605 1.4026 1.4693 1.4185 1.5007 1.5869 1.5036 1.6058 1.7138 1.5938. 1.7182 1.8509 1.6895 1.9990 1.7908 2.1589 1.8983 2,1049 2.3316 1.7103 1.7959 2.0122 2.2522 2.5182 1.8856 2.1329 2.4098 2.7196 1.9799 2.2609 2.5785 2.9372 2.3966 2.7590 2.9522 2.0789 2.1829 2.5404 2.2920 2.6928 3,1588 2.4066 2.8543 3.3799 2.5270 3.0256 2.9253 3.0715 1.1910 1.2625 1.3382 3.2071 3.3996 1.8385 1.9672 3,6165 3.8697 4.1406 4.4304 8% 1.0800 1.1664 9% 10% 11% 1.0900 1.1000 1.1100 1.1200 1.1881 1.2100 1.2321 1.2544 1,2950 1.3310 1.3676 1.4049 1.4116 1.4641 1.5181 1.5735 1.5386 1.6851 1.7623 1.6105 1.6771 1.7716 1.8704 1.9738 1.9487 2.0762 2,2107 2.1436 2.3045 2.4760 2.3579 2.5580 2.7731 2.5937 2.8394 3.1058 2.8531 3.1518 3.4785 3.4985 2.8127 3.1384 3.0658 3,4523 3.3417 3.7975 3.8833 4.3104 4.1772 4.7846 4.5950 5.3109 3.1722 3.6425 3.4259 3.9703 3.7000 4.3276 3.9960 4.7171 5.1417 5.6044 6.7275 5.0545 5.8951 5.5599 6.5436 6.1159 7.2633 8.0623 4.3157 4.6610 6.1088 7.4002 8.9492 10.8038 6.6586 8.1403 9.9336 12.1003 7.2579 8.9543 11.0263 13.5523 7.9111 9.8497 12.2392 15.1786 8.6231 10.8347 13.5855 17.0001 3.6035 3.8197 4.7405 4.0489 5.0724 5.0338 5.4365 5.8715 6.3412 3.2251 3.3864 4.2919 5.4274 6.8485 12% 1.8280 1.9926 2.1719 2.3674 2.5804 3.8960 4.3635 4.8871 5.4736 6.1304 6.8660 7,6900 8.6128 9.6463 15% 1.1500 1.3225 1.5209 1.7490 2.0114 2.3131 2.6600 3.0590 3.5179 4.0456 4.6524 5.3503 6.1528 7.0757 8.1371 9.3576 10.7613 12.3755 14.2318 16.3665 18.8215 21.6447 24.8915 28.6252 32.9190
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