Your employer is planning to create a new product line, including completely new operations. The up- front investment will be partly financed with a five-year term loan from a bank, in the amount of $2,500,000.00. This term loan will require fixed payments (either monthly or semi-annual [every six months]) until maturity. The loan officer believes that an EAR of 4.65% is appropriate.

a. What would the firms semi-annual payments be?

b. What would the firms monthly payments be?

c. What total payments would the firm make over one year with either semi-annual or monthly payments? (Just add up the payments, ignore any time-value-of-money issues.)

d. Compare your two answers to Question 2.c. Is one total larger than the other? Explain!