AC Development Company has taken out a $2,000,000 million construction loan to build a VBRO - a vacation rental by owner - in upper Michigan. Disbursements under the loan are expected to proceed as follows: Month 1-10, $200,000 each month. Each disbursement occurs at the end of the month. The budgeted annual interest rate on the loan is expected to remain fixed at 7.5% with a $25,000 loan origination fee. The $25,000 loan origination fee is to be paid in cash to the lender at closing

A) What will the interest carry for this project?

B) What will be the total loan amount that the developer must borrow (including interest carry)?

C) Calculate the lender’s IRR (effective cost to the borrower) on this construction loan

Please show work in excel!

Answer rating: 100% (QA)

Here are the steps in Excel to solve this problem E72000000 Original loan amount E825000 Loan ... View the full answer