Question
Gizmo, a small manufacturing company whose management wishes to reduce overhead by installing a new, energy efficient heating system. The new system costs $100K. due
Gizmo, a small manufacturing company whose management wishes to reduce overhead by installing a new, energy efficient heating system. The new system costs $100K. due to the companys insufficient cash reserves, the management has decided that borrowing money is the only way to finance the desired improvement. A problem arises when Gizmos accountant points out that a standard direct reduction loan would severely strain the firms cash flow during the heating season. In order to overcome this difficulty, the accountant suggests a periodic linear gradient series repayment scheme (G=$75) in a skip payment loan @ 12% APR compounded monthly. Month Repayment January-August Yes September-April Skip May-September Yes October-March Skip April-October Yes November-February Skip March-December Yes
1. Develop a worksheet repayment schedule for 4 years.
2. Select the BB case question link to enter the following information: a. Initial payment, Month #1 (first Jan payment) b. Last payment, Month #48 c. Interest charged during Month #48 d. % of PMT applied towards paying down the principal in Month #1 e. % of PMT applied towards paying down the principal in Month #48 f. Total interest paid at the end of the loan
3. Once you receive your feedback on BB and you are satisfied with the results, submit your worksheet with the drop box link provided in the folder for full credit.
| Loan Amount | $50,000.00 | Total PMT | Starting PMT | ||||||||||
| Monthlhy Linear Increase | $75.00 | Total INT | Ending Balance | ||||||||||
| APR Compounded Monthly | 12.000% | Effective Annual INT | Monthly Interest | ||||||||||
| PMT? | Sum PMT | Payment | |||||||||||
| Period | Year | Month | Yes=1 | Increments | Amount | Starting Bal | Plus Interest | Less PMT | Ending Balance | INT:PMT | PMT To Prin | ||
| 0 | 0 | Dec | 0 | $50,000.00 | |||||||||
| 1 | 1 | Jan | 1 | $50,000.00 | $0.00 | $0.00 | $50,000.00 | ||||||
| 2 | 1 | Feb | 1 | ||||||||||
| 3 | 1 | Mar | 1 | ||||||||||
| 4 | 1 | Apr | 1 | ||||||||||
| 5 | 1 | May | 1 | ||||||||||
| 6 | 1 | June | 1 | ||||||||||
| 7 | 1 | July | 1 | ||||||||||
| 8 | 1 | Aug | 1 | ||||||||||
| 9 | 1 | Sept | 0 | ||||||||||
| 10 | 1 | Oct | 0 | ||||||||||
| 11 | 1 | Nov | 0 | ||||||||||
| 12 | 1 | Dec | 0 | ||||||||||
| 13 | 2 | Jan | 0 | ||||||||||
| 14 | 2 | Feb | 0 | ||||||||||
| 15 | 2 | Mar | 0 | ||||||||||
| 16 | 2 | Apr | 0 | ||||||||||
| 17 | 2 | May | 1 | ||||||||||
| 18 | 2 | June | 1 | ||||||||||
| 19 | 2 | July | 1 | ||||||||||
| 20 | 2 | Aug | 1 | ||||||||||
| 21 | 2 | Sept | 1 | ||||||||||
| 22 | 2 | Oct | 0 | ||||||||||
| 23 | 2 | Nov | 0 | ||||||||||
| 24 | 2 | Dec | 0 | ||||||||||
| 25 | 3 | Jan | 0 | ||||||||||
| 26 | 3 | Feb | 0 | ||||||||||
| 27 | 3 | Mar | 0 | ||||||||||
| 28 | 3 | Apr | 1 | ||||||||||
| 29 | 3 | May | 1 | ||||||||||
| 30 | 3 | June | 1 | ||||||||||
| 31 | 3 | July | 1 | ||||||||||
| 32 | 3 | Aug | 1 | ||||||||||
| 33 | 3 | Sept | 1 | ||||||||||
| 34 | 3 | Oct | 1 | ||||||||||
| 35 | 3 | Nov | 0 | ||||||||||
| 36 | 3 | Dec | 0 | ||||||||||
| 37 | 4 | Jan | 0 | ||||||||||
| 38 | 4 | Feb | 0 | ||||||||||
| 39 | 4 | Mar | 1 | ||||||||||
| 40 | 4 | Apr | 1 | ||||||||||
| 41 | 4 | May | 1 | ||||||||||
| 42 | 4 | June | 1 | ||||||||||
| 43 | 4 | July | 1 | ||||||||||
| 44 | 4 | Aug | 1 | ||||||||||
| 45 | 4 | Sept | 1 | ||||||||||
| 46 | 4 | Oct | 1 | ||||||||||
| 47 | 4 | Nov | 1 | ||||||||||
| 48 | 4 | Dec | 1 | ||||||||||
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Restructuring And Innovation In Banking
Authors: Claudio Scardovi
1st Edition
331940203X, 978-3319402031
