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The Cali Company has obtained a $3,500,000 bridge loan to assist it in completing a...

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Finance

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 Calis existing variable rate credit facility, which expires in two years. The maximum amount of the credit facility is 80% of Calis accounts receivable. The accounts receivable will average $3,375,000 over the 2 year period.
  3. Obtain a loan bearing interest at 10% from Calis 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: 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.

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