Question
(Complex stream of cash flows) Roger Sterling has decided to buy an ad agency and is going to finance the purchase with seller financingthat is,
(Complex stream of cash flows) Roger Sterling has decided to buy an ad agency and is going to finance the purchase with seller financingthat is, a loan from the current owners of the agency. The loan will be for $2,000,000 financed at an APR of 7 percent compounded monthly. This loan will be paid off over 5 years with end-of-month payments, along with a $500,000 balloon payment at the end of year 5. That is, the $2 million loan will be paid off with monthly payments, and there will also be a final payment of $500,000 at the end of the final month. How much will the monthly payments be? a. How much of the loan will be paid off by the final $500,000 payment? (Round to the nearest cent.) b. How much of the loan must be paid off by the equal monthly payments? (Round to the nearest cent.) c. How much will the monthly payments be?(Round to the nearest cent.)
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