Business, 06.08.2021 22:50 myalee1419

Mohammad tried one last time to explain the loan structure offered by the company’s UAE bank. His boss just stared at him. Mo explained the detailed calculation of annual interest and principal payments, step-by-step, as detailed by the bank. The loan was for USD5 million, for five years, with an 8.200% interest rate.
Step 1: Calculate interest on Loan Principal for one year
Step 2: Multiply that interest by the number of years of the loan. The bank labeled this "Total Interest."
Step 3: Add the calculated Total Interest to the Loan Principal.
Step 4: Divide this calculated total by the number of years of the loan. This is the annual payment due on the loan (principal and interest).
Step 5: Using the calculated annual payment from step 4, structure the repayments to maake all interest payments (totaling to Total Interest from Step 2) up-front. Once all interest has been paid, the remaining cash flows associated with the annual payment are considered repayment of principal.
a. Following the 5 steps described, lay out the principal and interest payments on the loan agreement.
b. Calculate effective cost of funds on the loan agreement (the all-in-cost).
c. Lay out the principal and interest payments on the same loan if it was a 'normal' amortizing loan.
d. What is your assessment of the loan?

Answers: 3

Show answers

Another question on Business

Business, 21.06.2019 21:30

Recently, verizon wireless ran a pricing trial in order to estimate the elasticity of demand for its services. the manager selected three states that were representative of its entire service area and increased prices by 5 percent to customers in those areas. one week later, the number of customers enrolled in verizon's cellular plans declined 4 percent in those states, while enrollments in states where prices were not increased remained flat. the manager used this information to estimate the own-price elasticity of demand and, based on her findings, immediately increased prices in all market areas by 5 percent in an attempt to boost the company's 2016 annual revenues. one year later, the manager was perplexed because verizon's 2016 annual revenues were 10 percent lower than those in 2015"the price increase apparently led to a reduction in the company's revenues. did the manager make an error? yes - the one-week measures show demand is inelastic, so a price increase will decrease revenues. yes - the one-week measures show demand is elastic, so a price increase will reduce revenues. yes - cell phone elasticity is likely much larger in the long-run than the short-run. no - the cell phone market must have changed between 2011 and 2012 for this price increase to lower revenues.

Answers: 3

Answer

Business, 22.06.2019 12:50

Demand increases by less than supply increases. as a result, (a) equilibrium price will decline and equilibrium quantity will rise. (b) both equilibrium price and quantity will decline. (c) both equilibrium price and quantity will rise

Answers: 3

Answer

Business, 22.06.2019 16:50

Arestaurant that creates a new type of sandwich is using (blank) as a method of competition.

Answers: 1

Answer

Business, 22.06.2019 18:00

What is the cause of smoky exhaust?

Answers: 1

Answer

You know the right answer?

Mohammad tried one last time to explain the loan structure offered by the company’s UAE bank. His bo...