solution
solution.
You have been just hired to analyze the debt securities of your organization. The firm has outstanding loans and bonds. A quick review of the balance sheet shows the following:
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Order Paper Now| Liability Amount ($) | Nominal Interest (Coupon) rate | Years to Maturity | |
|---|---|---|---|
| Selected Liabilities of the firm | |||
| Simple loan | 800 | 12% | 19 |
| Fixed-payment Loans | 5,000 | 10% | 4 |
| Long-term Bonds #1 | 500,000 | 10% | 10 |
| Long-term Bonds #2 | 1,080,000 | ||
| Liabilities Total | 1,585,800 | ||
| Market Price for Bond #1 | 930.5 | ||
| Market Price for Bond #2 | 859.5 | ||
| Face value of Each Bond | 1,000 | ||
| Selected Current Assets of the firm | |||
| Marketable Securities | |||
| Treasury Bills | 100,000 |
Note: Treasury bills have $10,000 face value, which matures in one year. Each Treasury bill has a cost of $9,580.00
Using the information in the table, answer the following question:
What is the monthly payment needed to pay off the fixed-payment loans?
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