Question
Scott Schneider, CEO of Carolina, Inc., needs your help to better understand and solve some of the financial issues and tasks that Carolina is currently
Scott Schneider, CEO of Carolina, Inc., needs your help to better understand and solve some of the financial issues and tasks that Carolina is currently dealing with. SHOW ALL CALCULATION STEPS:
Carolina is considering a purchase of a new warehouse for its expanding parts division. Purchase will be financed with a $2,000,000 loan. The term of the loan: 20 years, amortizing (monthly payments), APR of 4%. The first payment is due one month from the day loan is taken.
a) What will be the amount of each monthly payment?
b) Alternatively, Carolina can use 30-year, monthly amortizing loan with 4.4% APR. How much more in total interest Carolina will pay if it goes with 30-year rather than 20-year loan? (Assume no pre-payments, refinancing, late payments etc.)
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