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Question 1 Suppose that a rm has borrowed $510,000 in the current year at 7.5% interest rate, with a commitment to repay the loan (principal
Question 1 Suppose that a rm has borrowed $510,000 in the current year at 7.5% interest rate, with a commitment to repay the loan (principal and interest) in equal annual instalments over the following 7 years. Calculate: a) The amount of the annual principal repayment bl The stream of interest payments c) The stream of total annual repayments Question 2 Suppose a firm plans to finance a project by borrowing $2.5 million from the Bank at a real interest rate of 3.5% per annum repayable in 15 years. Calculate a) The amount of the annual principal repayment bl The stream of interest payments c) The stream of total annual repayments Question 3 Suppose a firm decides to take out loan for $100,000. The rate of this loan is fixed at 5.5% per annum and the loan term is 10 years with a balloon option of 25% [a lump sum payment at the end of the loan). Calculate: a) The present value of the balloon repayment bl The stream of annual principal repayments c) The stream of interest payments d) The stream of total principal repayments
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