Reference no: EM132826624
The Cali Company has obtained a $3,500,000 bridge loan to assist it in completing a new warehouse. All construction is completed by the end of the reporting period.
Following are three financing for refinancing the bridge loan:
1. Enter into a 30-year fixed rate mortgage for $3,400,000 at 7% interest, leaving the company with a $100,000 note payable obtained from another lender. The note is repayable equally over the next year with quarterly repayments of $26,000.
2. Payoff the bridge loan with Cali's existing variable rate credit facility, which expires in two years. The maximum amount of the credit facility is 80% of Cali's accounts receivable. The accounts receivable will average $3,375,000 over the 2 year period.
3. Obtain a loan bearing interest at 10% from Cali's principal shareholder, with a balloon payment due in 5 years. Under the term of this arrangement, the owner can call up to $1,500,000 of funding at any time.
Required:
Problem 1: What is the balance sheet presentation for each independent case provided above In each case, the company successfully negotiated the financing before the end of the reporting period.