Your company will purchase equipment worth $11,000,000. You consider financing the purchase through a loan with a 5 year term that requires end of month payments. The loan is fully amortized at the end of the five year period. The APR is 8% (monthly compounding).
a) What is the amount of the required monthly loan payments?
b) What is the balance of the loan (amount still owed) at the end of 3 years?
c) Another bank offers you a loan for the same amount and terms but with monthly payments of $220,000. What is the APR of this loan?