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19. Suppose that you have generated the estimates listed below from a pro forma analysis for a company that had requested a three year loan.
19. Suppose that you have generated the estimates listed below from a pro forma analysis for a company that had requested a three year loan. The loan is a $1.5 million term loan with the equal annual payments of principals. The P&I payments are due at the end of each year with the annual interest rate = Prime rate + 2%. Yr. 3 75,000 140,000 800,000 Yr.1 Yr. 2 Capital expenditure 250,000 125,000 Cash dividends 140,000 140,000 Cash flow from operations before interest expense 750,000 780,000 Assuming the Prime rate - 8% cach year. What will be the interest payment at year 2? a. $60,000 b. $70,000 c. $80,000 d. $90,000 e. $100,000
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