1. You are the financial officer of a non-profit organization that is negotiating a five-year loan...
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1. You are the financial officer of a non-profit organizationthat is negotiating a five-year loan with a local bank to purchasea small warehouse. The loan will be for $100,000 at a 6% interestrepaid in five annual installments.
a. What annual payment will you have to make on the loan eachyear?
b. Assume your answer to part a above is $24,500. The bank willcharge a loan origination fee of $3,000 dollar that must be paid atthe beginning, plus you must pay $500 to file a release of lienagainst warehouse at the end of five years when the loan is paidoff. What is the effective rate of interest on the loan when theorigination fee and release of line fee are taken intoconsideration?
1. You are the financial officer of a non-profit organizationthat is negotiating a five-year loan with a local bank to purchasea small warehouse. The loan will be for $100,000 at a 6% interestrepaid in five annual installments.
a. What annual payment will you have to make on the loan eachyear?
b. Assume your answer to part a above is $24,500. The bank willcharge a loan origination fee of $3,000 dollar that must be paid atthe beginning, plus you must pay $500 to file a release of lienagainst warehouse at the end of five years when the loan is paidoff. What is the effective rate of interest on the loan when theorigination fee and release of line fee are taken intoconsideration?
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