Part 2

AllBets Corporation is building a $60 million office building in Las Vegas and is financing the construction at a 70 percent loan-to-value ratio, meaning they will make a 30% down payment and finance the remainder of the building. The loan has a fifteen-year maturity, calls for monthly payments, and has a fixed interest rate of 5.5 percent.

Using the above information, create a full amortization table, and then answer the following questions for your client:

1) What is the monthly payment?

2) How much of the first payment goes toward interest?

3) How much of the first payment goes toward principal?

4) How much will AllBets Corporation owe on this loan after making monthly payments for three years (the amount owed immediately after the thirty-sixth payment)?

5) If AllBets can add $3 million to its 25th payment, should they? Why or why not?

6) How much will they pay in total?

7) How much of that total will go toward interest?

8) How much of that total will go toward principal?