# Question

1. What is the monthly payment?

2. How much of the first payment is interest?

3. How much of the first payment is principal?

4. How much will Casino.com Corporation owe on this loan after making monthly payments for three years (the amount owed immediately after the thirty-sixth payment)?

5. 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 present value of the difference in the loan payments.

6. Returning to the original ten-year 8 percent loan, how much is the loan payment if these payments are scheduled for quarterly rather than monthly payments?

771. 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 owed immediately after the twelfth payment)?

8. What is the annual percentage rate on the original ten-year 8 % loan?

9. What is the effective annual rate (EAR) on the original ten-year 8 % loan?

Casino.com Corporation is building a $25 million office building in Las Vegas and is financing the construction at an 80 % 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 is contracted at an interest rate of 8%.

2. How much of the first payment is interest?

3. How much of the first payment is principal?

4. How much will Casino.com Corporation owe on this loan after making monthly payments for three years (the amount owed immediately after the thirty-sixth payment)?

5. 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 present value of the difference in the loan payments.

6. Returning to the original ten-year 8 percent loan, how much is the loan payment if these payments are scheduled for quarterly rather than monthly payments?

771. 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 owed immediately after the twelfth payment)?

8. What is the annual percentage rate on the original ten-year 8 % loan?

9. What is the effective annual rate (EAR) on the original ten-year 8 % loan?

Casino.com Corporation is building a $25 million office building in Las Vegas and is financing the construction at an 80 % 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 is contracted at an interest rate of 8%.

## Answer to relevant Questions

Define the following terms commonly used in bond valuation: (a) par value, (b) Maturity date, (c) Coupon, (d) Coupon rate, (e) Coupon yield, (f) Yield to maturity (YTM), and (g) Yield curve. Explain why the yield-to-maturity on a junk bond is not a particularly good measure of the return you can expect if you buy it and hold it until maturity. A $1,000 par value bond pays a coupon rate of 8.2 %. The bond makes semiannual payments, and it matures in four years. If investors require a 10 % return on this investment, what is the bond’s price? The nominal interest rate is 9 % and the inflation rate is 7 %. What is the real interest rate? The value of common stocks cannot be tied to the present value of future dividends because most firms don’t pay dividends. Comment on the validity, or lack thereof, of this statement.Post your question

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