Reference no: EM131602245

Your company is going to purchase new equipment with a price of $500,000, which the manufacturer is willing to finance, and you are trying to work out a payment schedule. Due to cash flow needs elsewhere in your company, your payment budget per month is $12,000. After 36 months, you have the ability to add a balloon payment of up to $50,000; however, the manufacturer will only allow a balloon payment with your last monthly payment. They will allow you to make smaller additional principal payments throughout the life of the loan, but they must be the same amount each month (other than with the last payment, when you can make the large balloon payment). You have the choice to finance for 36, 48, or 60 months, at an annual interest rate of 5%. But you want to pay off the loan as quickly as possible. What length of financing do you choose? What is the normal monthly required payment? Do you pay any extra per month, and if so, how much? What is the earliest month in which you can pay off the loan (meaning, in which month does the final payment occur)? What is the amount of the balloon payment? What is the total interest paid? Create the full amortization schedule (including any additional payment, such as the balloon payment). Stop the schedule with the month that has a beginning balance of zero, and show only the beginning balance for that month on the schedule (meaning, don’t show payments for that month).