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You have borrowed a construction and development loan. The loan terms are as follows: loan amount = $1,300,000; interest rate = LIBOR plus 0%; maturity

You have borrowed a construction and development loan. The loan terms are as follows: loan amount = $1,300,000; interest rate = LIBOR plus 0%; maturity = 10 months. Assume all interest is capitalized, i.e. interest accruals are added to the principal amount at the end of each month until the loan is repaid. The draw schedule and applicable LIBOR are as follows:

30-Nov-22 31-Dec-22 31-Jan-23 28-Feb-23 31-Mar-23 30-Apr-23 31-May-23 30-Jun-23 31-Jul-23
Drawdown 50,000 50,000 100,000 300,000 250,000 200,000 100,000 100,000 50,000
LIBOR NA 3.80% 3.810% 3.810% 3.820% 3.830% 3.840% 3.860% 3.860%

Given this information, what is your expected ending principal balance on 31-Jul-2023 when you must repay the loan?

*Hint: LIBOR follows a 360-day basis, so you must divide the number of days in the interest accrual period by 360 in order to correctly calculate the interest expense.

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