You work for a small warehousing business that is looking to expand its services of storing physical inventory for future sale or distribution by purchasing another warehousing facility. You are managing the purchase of this property. You have located a warehouse property to purchase at a price of $320,000. You plan to make a 20% downpayment of $64,000. Interest rates are rising quickly, but you've managed to secure a fixed-rate commercial mortgage at 4.5%. Commercial mortgages are typically much shorter than consumer mortgages like home loans, so the lender has offered you a 10-year term. Set up a mortgage spreadsheet model (including an amortization table) and answer the following questions below.

1.What is the monthly interest rate for this mortgage?

2. What is the monthly payment for this fixed-rate, 10-year mortgage?

3. What is the total interest paid on this mortgage over the 10 year term?

4. What is the ending balance on the mortgage after the first year?

5. Sometimes commercial lenders will amortize a loan for 10 years, but require the borrower to pay off the loan in a shorter period of time by paying off the rest of the loan in one final payment, known as a "balloon" payment. How much would you have to pay for that balloon payment (the ending balance) if your loan was still amortized for 10 years but you had to pay it off in 5 years?

6. How much would your monthly payment be if you managed to negotiate the price of the warehouse property down to $275,000 from $320,000, but kept your downpayment the same?

7. Let's say that your company was not able to get a commercial mortgage with a 4.5% interest rate, and instead the lender would only offer the loan at a 5.5% interest rate. What is the new monthly interest rate?

8. How much total interest would you pay at the end of the 10-year term if the interest rate was 5.5% rather than 4.5%, if all of the other original loan terms stayed the same?

9. Let's say that your lender was only willing to offer you a 5-year fixed rate commercial mortgage (a loan amortized over 5 years) rather than a 10-year loan. What would your monthly payment be for a 5-year loan, if all of the other original loan terms stayed the same?

10. How much total interest would you pay if your commercial mortgage was for 5 years rather than 10 years, keeping all of the other original loan terms the same?