Question: At the completion of construction, a project's final construction loan balance was US$1000. This amount must be amortized over the term of a 15-year loan

At the completion of construction, a project's final construction loan balance was US$1000. This amount must be amortized over the term of a 15-year loan with an annual fixed interest rate of 6.85%. Cash flow available for debt service will be US$128 in the first year of the project's operation (which will be the first year of amortization of the 15-year term loan) and is projected to increase at a rate of 5% per year.

Please construct an amortization schedule for the term loan that produces

(1) a minimum (pre-tax) debt service coverage ratio of at least 1.50 for each year of the loan and

(2) an aggregate (pre-tax) debt service coverage ratio of at least 1.55

Step by Step Solution

★★★★★

3.44 Rating (160 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

To construct the amortization schedule well calculate the annual debt service principal and interest payment and compare it with the cash flow availab... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...

The following additional information is available for the Dr. Ivan and Irene Incisor family from Chapters 1-5. Ivan's grandfather died and left a portfolio of municipal bonds. In 2012, they pay Ivan...

Massachusetts Stove Company manufactures wood-burning stoves for the heating of homes and businesses. The company has approached you, as chief lending officer for the Massachusetts Regional Bank,...

Hello This is regarding BUS5440. I need help with the following discussion questions and I need the answer in next 2 hrs as I have a deadline today, *********************************** Share your...

(1) Financial Ratios Referencing this week?s readings and lecture, what are the limitations of financial ratios? Classify your answer into at least the following categories: liquidity ratios,...

Need help with milestone one ACC 660, the attached like include guidelines, rubric and a case study on Starbucks from Harvard university. NOTES: 1. Please be sure to attach excel workbooks or...

Question 1 The Jumbo Group restaurant chain launched its initial public offering (IPO) in October 2015. As a financial analyst of Tiger Investment Fund, your boss has requested for you to brief her...

Please see the attachment and prepare financial analysis using spreadsheet and determine whether or not they should go with the project. For the exclusive use of Z. Wu, 2016. REVISED APRIL 14, 2016...

from this consolidated financial statement can you tell me the net income and total revenues ORANGE REGIONAL MEDICAL CENTER Consolidated Financial Statements December 31, 2012 and 2011 (With...

Please just help me correct the ones that I got wrong. Please, and thank you. The corrections are in the file seboprincess00322885. I made some corrections already so if you come across them, just...

Player R has two playing cards: a black ace and a red four. Player C also has two cards: a black two and a red three. Each player secretly selects one of his or her cards. If both selected cards are...

Porter Corporation owns all 30,000 shares of the common stock of Street, Inc. Porter has 60,000 shares of its own common stock outstanding. During the current year, Porter earns income (without any...

Capital structure refers to which of the following? Question 46Answer a. How a project is financed b. Specific policies about using financial funds c. The type of stock sold to finance an acquisition...

A 690-N Marine in basic training climbs a 11.0-m vertical rope at a constant speed in 9.00 s. What is his power output? W

As a sports car travels along a level stretch of road with constant speed, most of the power developed by the engine is used to compensate for the energy transformations due to friction forces...

A bin is given a push across a horizontal surface. The bin has a mass m, the push gives it an initial speed of 2.20 m/s, and the coefficient of kinetic friction between the bin and the surface is...

A block of mass m = 2.00 kg is attached to a spring of force constant k = 410 N/m as shown in the figure below. The block is pulled to a position x, = 4.80 cm to the right of equilibrium and released...

A crate of mass 9.8 kg is pulled up a rough incline with an initial speed of 1.46 m/s. The pulling force is 102 N parallel to the incline, which makes an angle of 19.9 with the horizontal. The...

In determining the needed resources in the process of organizing the supervisor group activities assigned duties defined objectives considered personal personnel equipment and money allocate...

Mylan Laboratories (Mylan) is a leading firm in the generic pharmaceutical industry. Generic drugs have chemical compositions similar to ethical drugs but sell for a significantly lower price. Once...

Sun Trust Banks owns a large block of Coca-Cola Company (Coke) common stock that it has held for many years. SunTrust indicates in a note to its financial statements that all equity securities held...

Refer to Problem 9.19 for Stebbins Corporation for Year 6, its first year of operations. Exhibit 9.19 shows the amounts for the Canadian subsidiary for Year 7. The average exchange rate during Year 7...

Using your answers to exercise S4-14, show how the Assiniboine Credit Union will report the following: a. Whatever needs to be reported on the bank's classified balance sheet at December 31, 2016....

The adjusted trial balance of Reid and Campbell Ltd. at December 31, 2017, appears below. Requirements 1. Prepare Reid and Campbell Ltd.'s 2017 income statement, statement of retained earnings, and...

On May 31, 2016, Nancy Thomas borrowed $6,000 from Assiniboine Credit Union. Thomas signed a note payable, promising to pay the credit union principal plus interest on May 31, 2017. The interest rate...