Calculate your annual payment for this amortized loan

Reference no: EM133739922

Assignment: Finance- Small Business Generating an Annual Income

Suppose you are planning to start a small business that requires an initial investment cost of $242,000. However, you do not have enough funds to start, and you plan to borrow money from Southern Oregon Finance Corporation (SOFC) - a finance company that provides business loans for small-business owners in the area. After careful consideration of your loan application, SOFC has ultimately decided to offer you an amortized loan, where they will pay off the initial investment cost of $242,000 for your small business today, and then you will repay them the loan by making equal annual payments (end-of-year) at a 10% interest rate over the next 15 years.

Answer the following questions:

1) Calculate your annual payment for this amortized loan. Then, develop and present the amortization schedule table.

2) From the amortization schedule table, identify in what year the loan balance will be half paid off, approximately.

3) Suppose you expect your small business to generate an annual income of $33,000. Do you think if taking the amortized loan from SOFC is a good investment decision? Provide explanations.

Reference no: EM133739922

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