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2. What is the monthly debt service payment on Marco’s loan if Enrique lends him $15,000 for four years at 8% interest?
3. Tanya is trying to prepare her loan amortization schedule for the renovation of her bed-and-breakfast facility. Her banker is quoting her an interest rate of 12% for four years. The loan amount is $25,000. Prepare the loan amortization schedule.
4. Juan would like to add a shuttle service for his hotel guests to nearby shopping centers. The van has a price tag of $35,000. His bank will give him a loan for $25,000 at only 6% interest, compounded monthly, if Juan pays $10,000 as a down payment. What is Juan’s loan amortization schedule for the first five months? (The term of the loan for Juan is 5 years)
6. Efren is considering buying some new equipment for his restaurant for $30,000. However, the restaurant supply store says they also lease equipment. The supply store will offer him a five-year lease with no down payment, four annual lease payments of $6,000 per year, and a final payment of $10,000. If Efren’s cost of capital is 8%, should he select the lease or purchase option? If there is a salvage value of $1,000 if he buys the equipment but no salvage value with the lease option, will his decision change?
8. Milton is offering Bernard an opportunity to invest in his deal. He is asking for an equity investment of $125,000 and promises to pay Bernard the following cash flow:
Year Cash Flow
Bernard’s hurdle rate is 14%. Does Milton’s proposal meet Bernard’s investment goal?