Borrow $5,000,000 from a bank quoted 3.4% annual interest rate and do quarterly payments of $400,000. How many years does it take to pay the loan back? Round your answer to two decimals. Use your finding to calculate cumulative interest and Cumulative principal paid
Borrow $5,000,000 from a bank quoted 3.4% annual interest rate and do quarterly payments of $400,000. How many years does it take to pay the loan back? Round your answer to two decimals. Use your finding to calculate cumulative interest and Cumulative principal paid
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
Related questions
Question
If you could solve option 3 with formulas
Option 3: Borrow $5,000,000 from a bank quoted 3.4% annual interest rate and do quarterly payments of $400,000. How many years does it take to pay the loan back? Round your answer to two decimals. Use your finding to calculate cumulative interest and Cumulative principal paid
Transcribed Image Text:Option 3
Loan
APR
Periods/year
Payments (year)
Future value of loan
Period
Interest
Principal
Balance
Transcribed Image Text:Future
Present Value Annual Interest
Duration in
Periodic Payment
Value
Annual
Cumulative
Cumulative
Option
(PV)
Rate
Years
Periods/ Year
(PMT)
(FV)
Payments
Interest
Principal
Option 1: $4,600,000 loan at 3.5% APR.
Bimonthly for 5 years.
Option 2: $5,000,000 loan at 3.8% APR.
Monthly for 6 years.
Option 3: $5,000,000 loan at 3.4% APR.
Quarterly payments of $400,000
Option 4: $150,000/month from store revenue
for 10 months. 2.5% opportunity cost lost.
Option 4: Finance the balance, $3,500,000
from the bank at 3.4% quarterly for 5 years.
Option 5: $2,500,000 from investment
account. 3% opportunity cost lost for 10
months.
Option 5: $2,500,000 from the bank at 4.0%
paid back monthly for 3 years
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education