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You get a loan of $10,000 for your startup today. You are expected to pay 24 equal monthly installments (SA per month) at APR
You get a loan of $10,000 for your startup today. You are expected to pay 24 equal monthly installments (SA per month) at APR 12%, compounded monthly, starting from a month from today. At the end of the first year, bank offers you a new deal. If you pay an additional $800 at the time of your 12th payment, you will only have to make 10 more payments of A instead of 12 more payments. a) Would you take this deal if you do not have $800 at the time of the 12th payment and you would have to borrow it at APR %12? b) Would you take the deal if you have $800 at the time of the 12th payment and also have a separate investment opportunity that pays 2% per month? c) Given that you are facing the case under part (b), what is the IRR of taking the $800 deal that the bank offers? (Only writing the equation that would solve for IRR is enough. You do not need to solve the equation)
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a No I would not take the deal if I do not have 800 at the time of the 12th payment and I would have ...Get Instant Access to Expert-Tailored Solutions
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