Solution-Calculate the repayment cash flows for a four-year

Calculate the repayment cash flows for a four-year loan

Reference no: EM133070658

A company has a choice between a bullet loan and an equivalent amortized loan with a value of $3,500,000. Calculate the repayment cash flows for a four-year loan with 3.15% pa fixed interest rate bullet loan and the equivalent amortized loan.

Year	Bullet loan repayments		Amortized loan repayments
	3.15%	2.35%	3.15%	2.35%
1	?		?
2	?		?
3	?		?
4	?		?

Based on your calculations for the bullet loan repayments and amortized loan repayments; explain why the bank recommends that the amortized loan be taken. If interest rates fell to 2.35% fixed rate, would that alter the bank's recommendation?

Reference no: EM133070658

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Calculate the repayment cash flows for a four-year loan

Reference no: EM133070658

Reference no: EM133070658

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