E6.18 (LO 4) (Least Costly Payoff) Assume that Sonic Foundry Corporation has a contractual debt outstanding. Sonic has available two means of settlement. It can either make immediate payment of $2,600,000, or it can make annual payments of $300,000 for 15 years, each payment due on the last day of the year. Instructions Which method of payment do you recommend, assuming an expected effective interest rate of 8% during the future period?
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E6.18 (LO 4) (Least Costly Payoff) Assume that Sonic Foundry Corporation has a contractual debt outstanding. Sonic has available two means of settlement. It can either make immediate payment of $2,600,000, or it can make annual payments of $300,000 for 15 years, each payment due on the last day of the year.
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Which method of payment do you recommend, assuming an expected effective interest rate of 8% during the future period?
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- (Q) A borrower takes out a 5/1 Hybrid ARM for $600,000 with an initial contract interest rate of 5.5%. The interest rate will adjust according to the 1-year LIBOR rate, plus a margin of 2%. At the first reset date, 1-year LIBOR is at 5.5%. What will the borrowers' monthly payment be immediately after the first reset? (State the payment as a positive number. Unless otherwise stated, you can assume 5/1 ARMs have a term of 30 years. Round your answer to 2 decimal places.)Assume that Sonic Foundry Corporation has a contractual debt outstanding. Sonic has available two means of settlement. It can either make immediate payment of $2,600,000, or it can make annual payments of $300,000 for 15 years, each payment due on the last day of the year. Instructions Which method of payment do you recommend, assuming an expected effective interest rate of 8% during the future period?Assume that Sonic Foundry Corporation has a contractual debt outstanding. Sonic has available two means of settlement. It can either make immediate payment of $2,673,000, or it can make annual payments of $347,100 for 15 years, each payment due on the last day of the year. Click here to view factor tables. Which method of payment do you recommend, assuming an expected effective interest rate of 10% during the future period? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.) Present value of annual payments Recommended payment method Annual Payments 44
- Assume that Sonic Foundry Corporation has a contractual debt outstanding. Sonic has available two means of settlement. It can either make immediate payment of $1,979,000, or it can make annual payments of $270,300 for 15 years. Click here to view factor tables. Payments must begin now and be made on the first day of each of the 15 years. What payment method would you recommend assuming an expected effective-interest rate of 11% during the future period? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 458,581.) Present value of annual payment Recommended payment method $ Immediate Payment ✔Assume that Sonic Foundry Corporation has a contractual debt outstanding. Sonic has available two means of settlement. It can either make immediate payment of $2,775,000, or it can make annual payments of $340,000 for 15 years. Click here to view factor tables. Payments must begin now and be made on the first day of each of the 15 years. What payment method would you recommend assuming an expected effective-interest rate of 9% during the future period? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 458,581.) Present value of annual payment $ Recommended payment method SUPPORTH4. A 10 year loan of $2,000 is repaid with payments the end of each year. There are 2 options: (i) Equal annual payments at an annual effective rate of 8.07%; (ii) Repayments of the principal of $200 each year plus interest on the outstanding balance at an effective rate of i%. The sum of all payments under each option is the same. What is i? Please show proper step by step calculation
- A partially amortizing loan for $92,000 for 10 years is made at 6 percent interest. The lender and borrower agree that payments will be monthly and that a balance of $20,000 will remain and be repaid at the end of year 10. Required: a. Assuming 4 points are charged by the lender, what will be the yield if the loan is repaid at the end of year 10? b. What must the loan balance be if it is repaid after year 4? c. What will be the yield to the lender if the loan is repaid at the end of year 4? Note: For all requirements, do not round intermediate calculations, round your final answers to 2 decimal places.H3. The interest rate on a $6400 loan is 7% compounded semi-annually, and the loan is to be repaid by monthly payments of $155. Construct a partial amortization schedule showing the last 2 payments. Determine the total amount paid to settle the loan. Show work, not just the answer. Determine the total principal repaid. Determine the total amount of interest paid. Show work, not just the answer.A partially amortizing loan for $100,000 for 10 years is made at 9 percent interest. The lender and borrower agree that payments will be monthly and that a balance of $20,000 will remain and be repaid at the end of year 10. Required: a. Assuming 3 points are charged by the lender, what will be the yield if the loan is repaid at the end of year 10? b. What must the loan balance be if it is repaid after year 4? c. What will be the yield to the lender if the loan is repaid at the end of year 4? Note: For all requirements, do not round intermediate calculations, round your final answers to 2 decimal places. a. Annual yield b. Loan balance c. Annual yield % %
- On Jan. 31, 2022, ABC Corp. agreed with the bank a P5,000,000 loan to be credited to ABC on May 1, 2022. The prevailing interest rate on Jan. 31 was 7% but they also entered into a forward rate agreement (FRA) 3-12 to set the interest of the future loan at 8%. The actual interest rate on May 1 was 10%. How much is the cost savings/(incremental cost) attributable to the FRA?6. Assume a retail shopping center can be purchased for $6.0 million. The center's first year NOI is expected to be $489,500. A $45,000,000 loan has been requested. The loan carries a 4.0 percent fixed contract rate, amortized monthly over 25 years with a seven- year term. What will be the property's (annual) debt coverage ratio in the first year of operations? a. 1.546. b. 0.098. c. 18.547, d. 0.063.(Ch 11 #9) There is a loan obligation to pay $1000 one year from today and another $1000 two years from today. Assuming the annual effective rate of interest is 10%, find the following: a) Macaulay duration of the loan. b) Modified duration of the loan. c) Convexity of the loan.