The fed cuts federal funds rate and discount rate

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The Fed cuts the Federal Funds rate and the Discount rate and the Prime goes down to 3.5 percent. Al Truistyk owns an exercise center and needs to upgrade his equipment in order to meet his customers’ needs. The equipment costs $275,000 and the lender requires a 10 percent down payment. Al must borrow $250,000 and the lender agrees to a 60-month fixed principal fixed interest rate loan with a rate of Prime plus 4 percent.

a. Construct an amortization table for the first 3 months of this loan.

b. Instead of a fixed interest loan, the lender gave Al a variable rate loan of prime plus 4 percent. Using the Internet find the current prime lending rate. Construct an amortization table listing Al’s interest payments for the first 3 months of this loan if he borrowed the money on January 1, 2013.

Reference no: EM131072689

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