Assignment: Casino Corporation Present Value
Casino 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%.
Using the above information, answer the following questions.
• What is the monthly payment?
• How much of the first payment is interest?
• How much of the first payment is principal?
• How much will Casino Corporation owe on this loan after making monthly payments for three years (the amount owed immediately after the thirty-sixth payment)?
• 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.
• 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?
• 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)?
• What is the annual percentage rate on the original ten-year 8 % loan?
• What is the effective annual rate (EAR) on the original ten-year 8 % loan?
Format your assignment according to the give formatting requirements:
• The answer must be using Times New Roman font (size 12), double spaced, typed, with one-inch margins on all sides.
• The response also includes a cover page containing the student's name, the title of the assignment, the course title, and the date. The cover page is not included in the required page length.
• Also include a reference page. The references and Citations should follow APA format. The reference page is not included in the required page length.