John Spencer has just negotiated a 10-year loan for his Elite restaurant. He borrowed $5.000.000 with a
Question:
John Spencer has just negotiated a 10-year loan for his Elite restaurant. He borrowed $5.000.000 with a stated semiannual rate of 3% with payments due every six months. The loan allows him to refinance at the end of 3 years at an annual rate of 6% with payments to be made semi-annually.
1. Prepare a loan repayment schedule for the first 3 years.
2. Calculate the total interest expense for this loan over the first 3 years.
3. What is the balance on the loan at the end of 3 years?
4. If the loan is refinanced at the end of 3 years, what would be the new annual payment?
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