Millennium office project has direct construction cost, excluding interest carry and loan fees of $1.2 Million. The project will be completed in four month. To finance all construction costs, improvements and interest carry, the developers have arranged a loan with Bank of America. The construction loan has an annual rate of 8% and an origination fee of 2 points. Direct construction cost draws are taken down in 4 equal amounts commencing in the beginning of month 1. Permanent financing is arranged at the end of month 4 at interest rate of 6% and 2.5% prepaid loan origination fee. The permanent loan has 10 years term and it is amortized over 25 years. What is the interest carry on the construction loan rounded to the nearest dollar?

Millennium office project has direct construction cost, excluding interest carry and loan fees of $1.2 Million. The project will be completed in four month. To finance all construction costs, improvements and interest carry, the developers have arranged a loan with Bank of America. The construction loan has an annual rate of 8% and an origination fee of 2 points. Direct construction cost draws are taken down in 4 equal amounts commencing in the beginning of month 1. Permanent financing is arranged at the end of month 4 at interest rate of 6% and 2.5% prepaid loan origination fee. The permanent loan has 10 years term and it is amortized over 25 years. What is the interest carry on the construction loan rounded to the nearest dollar?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 34P

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