Able Express Care borrows $12,000,000 from a bank under the following terms: Payments are made in 6-month intervals for 15 years. Interest rate is 10% Compounded semiannually (i.e., 5% per half-year).

For each question below, you would need to develop an amortization table, best obtained using Excel. The tables are to be included as Appendix A, B and C.

Scenario A. Able pays all the payments on time. Prepare an amortization table. Show it as Appendix A, on a new page.

What is the total interest paid by Able over the entire term of the loan?

What is the outstanding loan balance at the end of 7th year?

Scenario B. Able skips the four semi-annual payments for years 4 and 5. And, Able will not make up for the skipped payments by paying extra when they resume the usual payment schedule and will pay as per the original schedule for the remaining term. Prepare an amortization table. Show it as Appendix B, on a new page. What is the total interest paid over the entire term (15 years) of the loan?

What is the outstanding loan balance at the end of end of 7th year?

What is the outstanding loan balance at the end of the original loan term?

Scenario C.

This scenario is not a stack-on of the previous scenario. Assume Able Pays two extra payments at the end of 4th and 5th years of $4 million each. These payments are made in addition to the usual scheduled payments, determined based on initial contract. Prepare an amortization table.

What is the total interest paid by Able over the term of the loan (that has a new end date)? Answer

What is the outstanding loan balance at the end of 7th year?

By paying extra towards the principal, how many half-years were eliminated?