1. What is the monthly payment? 2. How much of the first payment is interest? 3. How much of the...1 answer below »

1. What is the monthly payment? 2. How much of the first payment is interest? 3. How much of the first payment is principal? 4. How much will Casino.com Corporation owe on this loan after making monthly payments for three years (the amount owed immediately after the thirty-sixth payment)? 5. Should this loan be refinanced after three years with a new seven-year 7 percent loan, if the cost to refinance is $250,000? To make this decision, calculate the new loan payments and then the present value of the difference in the loan payments. 6. Returning to the original ten-year 8 percent loan, how much is the loan payment if these payments are scheduled for quarterly rather than monthly payments? 771. For this loan with quarterly payments, how much will Casino.com Corporation owe on this loan after making quarterly payments for three years (the amount owed immediately after the twelfth payment)? 8. What is the annual percentage rate on the original ten-year 8 % loan? 9. What is the effective annual rate (EAR) on the original ten-year 8 % loan? Casino.com Corporation is building a $25 million office building in Las Vegas and is financing the construction at an 80 % loan-to-value ratio, where the loan is in the amount of $20,000,000. This loan has a ten-year maturity, calls for monthly payments, and is contracted at an interest rate of 8%.

## 1 Approved Answer

September 15, 2021Solution:

1. The monthly payment, PMT is

PV = PMT (PVIFA @ I, n)

20,000,000 = PMT (PVIFA @ 8%/12, 12 x 10)

20,000,000 = PMT [(1.006667^120 - 1)/(0.006667)*1.006666^120)]

20,000,000 = PMT (82.42)

PMT = $242,655.19

2. Interest= Loan amount x Monthly interest rate

Interest =$20,000,000 x8%/12

Interest = $133,333.33

3. Principal first month = Monthly payment – Interest first month

Principal first month = $242,655.19 – $133,333.33

Principal first month = $109,321.86

4. 7 Years x 12 Months = 84 Payments...

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