Question
Ryan Enterprises has a business plan for a QR Shopper, a start-up business. He is considering two financing alternatives for a business loan. Ryan is
Ryan Enterprises has a business plan for a QR Shopper, a start-up business. He is considering two financing alternatives for a business loan. Ryan is concerned about several issues that may influence the decision. One such issue is the comparative impact of the two alternatives on financial statements. Below are the two financing alternatives that Ryan Enterprises is considering:
Alternative A: A seven-year business loan in the amount of $450,000 with a 5% interest rate. The terms of the loan require payments of principal and interest every six months at the end of each period (six-months).
Alternative B: A five-year business loan in the amount of $450,000 with a 4.25% interest rate. The terms of the loan require payments of principal and interest every quarter at the beginning of each period (quarter).
Required: Prepare the amortization schedule for each alternative. Create a separate worksheet for each schedule and name the tabs AlternA and AlternB. For each amortization schedule you will need to calculate the loan payment and present the cumulative interest, principal payments, and outstanding balance. Follow the format in Exhibit 14-14 on page 789 of your textbook. The worksheets should be formatted professionally with proper headings and numeric values formatted using accounting format with zero decimals.
***Format is: Date/Cash Interest/Effective Interest/Increase In Balance/Outstanding Balance
Please use that format for the schedules, thank you!
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