Company X needs to purchase a new company car. The company has $50,000 in cash but the
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Question:
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2. Z Corp. plans to purchase a $650,000 building. Z Corp. will put 20% down and borrow the balance from Santander Bank. It borrows the money on a 30-year loan with an APR of 6.5%. (16 points 5/5/6)
What is the building's monthly mortgage?
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Five years later, what is the balance on the loan?
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In the first five years, how much interest did you pay?
Total payments
Principle
Interest
3. XYZ Company borrows $450,000 to purchase a piece of capital equipment. The term of the loan is 20 years at an APR of 6.5%.
What is the monthly payment? (20 points 5/5/5/5)
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After five years, APR falls to 4.75%. How much is the balance due on the loan?
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How much of the loan principle has XYZ Company paid off during the first five years?
After five years, XYZ realizes the machinery has a longer productive life than originally estimated; what would the loan payment be if it took out a new 20 year
loan?
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4. The Nickelodeon Manufacturing Corp. has a series of $1,000 par value bonds outstanding. Each bond pays interest (coupon payment) semi-annually and carries an annual coupon rate of 6%. Some bonds have a maturity date of 4 years and some have a maturity date of 10 years. If the YTM is 10%, what is the current price of:
Round your answers to 2 decimal points:
The bonds with 4 year maturity
The bonds with 10 year maturity
Are the bonds selling at a discount, at par, or at a premium? Briefly explain.
Which of the bonds has a higher selling price under the current market conditions? Briefly explain.
4 year bond 10 year bond
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Related Book For
Government and Not for Profit Accounting Concepts and Practices
ISBN: 978-1118983270
7th edition
Authors: Michael Granof, Saleha Khumawala, Thad Calabrese, Daniel Smith
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