Determine the value that will amortize the principal

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A company has assumed a debt of $45,000,000 to be paid in quarterly installments (at the end of each quarter) for 2 years. The accepted interest rate is 8% semiannually with quarterly compounding. You believe that at the end of the first 12 months of the debt, the company will have liquidity problems and therefore you are thinking of paying only interest on that installment (12-month installment).

The General Manager asks you to prepare a report stating:

Problem a) Installment value of the debt using the fixed installment method.

Problem b) Determine the value that will amortize the principal if the entire installment is paid in month 12.

Problem c) Determine the value that will be paid for interest in month 12.

Problem d) Verify the results obtained above, preparing the debt amortization table.

Reference no: EM132944702

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