Due to the difficult national financial situation, Mr. Perez finds himself in a dilemma. He needs $4,000,000 today and has quoted 3 types of loans: (a) 1 year term with quarterly payments at a rate of 12% per annum capitalizable quarterly. (b) 2 year term with semiannual payments at an annual rate of 14% with semiannual capitalization. (c) 3 year term with quarterly payments at a rate of 10% per annum with quarterly capitalization. As a consultant, you are asked to evaluate the alternatives by calculating today what the situation of each loan will be in month No. 12, indicating also the value of interest paid, interest payable and the value of amortized principal and what remains to be amortized.

Due to the difficult national financial situation, Mr. Perez finds himself in a dilemma. He needs $4,000,000 today and has quoted 3 types of loans: (a) 1 year term with quarterly payments at a rate of 12% per annum capitalizable quarterly. (b) 2 year term with semiannual payments at an annual rate of 14% with semiannual capitalization. (c) 3 year term with quarterly payments at a rate of 10% per annum with quarterly capitalization. As a consultant, you are asked to evaluate the alternatives by calculating today what the situation of each loan will be in month No. 12, indicating also the value of interest paid, interest payable and the value of amortized principal and what remains to be amortized.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 19P

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Due to the difficult national financial situation, Mr. Perez finds himself in a dilemma. He needs $4,000,000 today and has quoted 3 types of loans:

(a) 1 year term with quarterly payments at a rate of 12% per annum capitalizable quarterly.

(b) 2 year term with semiannual payments at an annual rate of 14% with semiannual capitalization.

As a consultant, you are asked to evaluate the alternatives by calculating today what the situation of each loan will be in month No. 12, indicating also the value of interest paid, interest payable and the value of amortized principal and what remains to be amortized.

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