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Able Medical Clinic has borrowed $30 million from a bank under the following terms: Payments are to be made end of every quarter for next 10 years. The firm also plans to make additional $1 million payment at the end of each of the years 1 thru 5. Interest rate is 6.4% compounded quarterly. Prepare an amortization table. You may like to use Excel to do this, even though you could do it manually. a) How much interest did you pay over the term of the loan? b) What is the outstanding balance at the end of 3 years? Make sure you can compute this using the financial calculator. Verify that the number you obtained from the amortization table is the same as the one obtained using the calculator. c) Show the results of the amortization table showing all the 40 quarters. You may like to color code the display for quarter 12th quarter12, highlighting the result for question b, above.

Financial Management, Finance

  • Category:- Financial Management
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