Reference no: EM132525283

1. Suppose you want to buy a house which is valued at $100,000.

You decide to borrow the money from the bank at an interest rate of 12.5 percent and agree to make equal annual end of year payments over the next 5 years to fully repay the loan. Also assume you work as a financial manager at the bank and you want to prepere a loan amortization schedule yourself.

So, prepare the loan amortization schedule showing separate columns for the Year, beginning-of-year principal, loan payment, interest amount, principal amount and end-of-year principal.

2. Simmers Inc., on January 1, 2019, on a meeting held by the company's board of directors with the Finance department decides to raise long term funds for investment through issuing bonds. The financial managers decides to issue a 12% coupon interest rate, 10-year bond with a $7500 par value that pays interest annually. If the yield to maturity on the bond is 9% then find out the price of the bond.

Upon calculation of the price, please also specify what kind of a bond is this?