BioElectroMechanical Systems (BEMS) is a start-up company with high potential and little available cash. Sterling Wang, CFO of BEMS, obtains a $750,000 loan for necessary technology from a venture capitalist Marcia Mellow, who charges BEMS interest at 20 percent per year compounded monthly. The agreement calls for no payment until the end of the first month of the third year, with equal monthly payments thereafter for four complete years or forty-eight monthly payments. Draw a cash flow diagram before attempting to solve this problem.
a. Compute the monthly payments for the loan.
b. Compute the total amount of interest paid to the lender.
c. Compute the total principal paid to the lender.
d. If BEMS is doing incredibly well and Mr. Wang decides to pay off the debt immediately after making the thirty-sixth payment in month 60, how much must BEMS pay to the lender?