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I need help getting this all together, I want to make sure I'm doing this correctly. I could use the help. Chapter 5 Case Problem
I need help getting this all together, I want to make sure I'm doing this correctly. I could use the help.
Chapter 5 Case Problem 4: ROSEY'S ROSES Rosey's Roses is considering several alternative means of financing an expansion. One alternative is to borrow $600,000 from a local bank, but another alternative is to borrow this amount from investors by issuing bonds. Both alternatives involve a 10-year debt period with annual payments. Modify the workbook ch508 to compute a loan and bond analysis, naming and formatting cell ranges as appropriate. Assume an initial loan rate of 7 percent, an initial bond stated rate of 7 percent, and a market interest rate of 6.5 percent. (use formulas for all cells) a. Print the newly completed loan and bond worksheets in Value view, with your name and date printed in the lower left footer and the file name in the lower right footer. b. Use the Scenario Manager to create two loan scenarios called Best Case and Worst Case. In the Best Case, the rate would be 6 percent and the loan amount would be $550,000; in the WorstCase, the rate would be 8 percent and the loan amount would be $650,000. The resulting comparison values you're trying to predict are Payment, Total Payments, and Total Interest. Print the resulting summary worksheet. c. Use the Scenario Manager to create two bond scenarios called Best Case and Worst Case. In the Best Case, the market rate would be 6 percent and the stated rate would be 6.5 percent. In the Worst Case, the market rate would be 8.25 percent and the stated rate would be 8 percent. The resulting comparison values you're trying to predict are Proceeds, Total Interest Payments, and Total Interest Expense. Print the resulting summary worksheet. d. Use Excel's goal seek feature to calculate the interest rate that the company would have to negotiate under the original loan analysis (in part a) to achieve a monthly payment of $80,000. Round the interest rate to two decimal places. Print the resulting worksheet in Value view, with your name and date printed in the lower left footer and the file name in the lower right footer. e. Use Excel's goal seek feature to calculate the market rate necessary to achieve bond proceeds of $650,000. Round the interest rate to two decimal places. Print the resulting worksheet in Value view, with your name and date printed in the lower left footer and the file name in the lower right footer. Rosey's Roses Loan Amortization Schedule Loan Amount Rate Loan Term Payment Student Name 11/02/2016 Pmt. # Payment Interest Principal Balance 1 2 3 4 5 6 7 8 9 10 Totals qattachments_6afe81c9e1fd24d427d18c91838bb955cccad139.xlsx Rosey's Roses Bond Amortization Schedule Market Rate Stated Rate Face Value Bond Term Interest Payment Proceeds (Discount) / Premium Payment # Interest Payment Interest Expense Amortization (Discount) Premium Carrying Value 1 2 3 4 5 6 7 8 9 10 Totals Student Name 11/02/2016 qattachments_6afe81c9e1fd24d427d18c91838bb955cccad139.xlsxStep by Step Solution
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