Your client wants to finance a debt of 200 million dollars. He wants to have a grace period of 2 years, in which he would not pay interest, but the interests would accumulate to capital. Start with a gradual monthly payment plan to pay off the debt in 8 years. The interest rate negotiated with the bank is 5% annually with a monthly capitalization.

Propose two payment alternatives for the debt that your client is going to have, one using arithmetic gradients and the another geometric gradients.

Answer rating: 100% (QA)

SOLUTION Arithmetic Gradient Payment Plan In an arithmetic gradient payment plan the payments increase by a constant amount each period To calculate the payment amount for each period we can use the f... View the full answer