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    Worksheet 1 Solutions

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    Den Celestra
    1) The interest rate on a $4,500,000 loan that was repaid after 5 years with a final payment of $5,310,000 is 18%. 2) To calculate the annual payment amount to repay a $20,000,000 loan with 10% interest rate over 6 years, use the present value formula. The resulting annual payment is $4,592,140. 3) For a loan with a principal of $180,000 and interest rate of 6%, the total repayment amount after 10 years is $215,100, showing that a lower interest rate results in a better overall financing option.

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    Worksheet 1 Solutions

    Uploaded by

    Den Celestra
    15 views2 pages
    1) The interest rate on a $4,500,000 loan that was repaid after 5 years with a final payment of $5,310,000 is 18%. 2) To calculate the annual payment amount to repay a $20,000,000 loan with 10% interest rate over 6 years, use the present value formula. The resulting annual payment is $4,592,140. 3) For a loan with a principal of $180,000 and interest rate of 6%, the total repayment amount after 10 years is $215,100, showing that a lower interest rate results in a better overall financing option.

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    1) The interest rate on a $4,500,000 loan that was repaid after 5 years with a final payment of $5,310,000 is 18%. 2) To calculate the annual payment amount to repay a $20,000,000 loan with 10% interest rate over 6 years, use the present value formula. The resulting annual payment is $4,592,140. 3) For a loan with a principal of $180,000 and interest rate of 6%, the total repayment amount after 10 years is $215,100, showing that a lower interest rate results in a better overall financing option.

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    © All Rights Reserved
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    15 views2 pages

    Worksheet 1 Solutions

    Uploaded by

    Den Celestra
    1) The interest rate on a $4,500,000 loan that was repaid after 5 years with a final payment of $5,310,000 is 18%. 2) To calculate the annual payment amount to repay a $20,000,000 loan with 10% interest rate over 6 years, use the present value formula. The resulting annual payment is $4,592,140. 3) For a loan with a principal of $180,000 and interest rate of 6%, the total repayment amount after 10 years is $215,100, showing that a lower interest rate results in a better overall financing option.

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    of 2

    1.

    )
    i )
    4,500,000 ( 1 +
    5,310,000 =

    ↳
    5÷ =
    It I
    4,500 ,
    ooo

    ↳ b- , 310,000 - 4,500,000
    = i
    ooo
    4,500 ,

    0.18
    the loan
    of
    =

    ↳ interest rate

    2.)
    $20,000,000
    10%
    i =

    •i*•••5•

    * * ☒ Er ☒
    ☒
    ✗ ✗ ✗ ✗
    ☒ ✗

    Where
    solving for A:
    annual installment
    value
    10% 6) present
    ( pI , , p ,

    =
    201000,00

    ↳a 0.229607
    =
    20,000,000 (0-2296)--4,592,140--11=7
    8%09.fm?%00- 11001=11-07%7
    3.)
    interest rate :

    |
    " """
    "" " "
    " "
    4.) for 6% interest rate rate

    )
    l t 0,6 180,000 (3) 10.065
    =

    a. +
    , go , ooo
    "

    180,000 (1-06)
    -

    $214382 -88 =
    180,000 t 35,100
    →

    $215,1000
    -4

    interest
    • %•• The 6%
    amount
    better because the total
    rate is
    lower .

    WACC =
    13% .
    equity capital
    - 6% . debt
    financing :
    28%
    5)
    of debt :X
    weight
    1- ✗
    equity
    :

    weight of 6%-6%11
    13% = 28% ✗ t 6%11 -

    X) µw÷Yui¥
    22% ✗

    / =/68.19%7
    =

    7%

    131.817-1
    0.3181
    ??_%
    1
    -

    ✗ =

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