Question

Assume the debt will be paid back in equal installments over the life of the project...

  1. Assume the debt will be paid back in equal installments over the life of the project which is 10 years. The cost of debt for computing the present value of the financing is 7.75%.The total loan amount is $107.6 million. Calculate the yearly interest expense.

Homework Answers

Answer #1
Total Loan Amount (a) 107.60 Million
Cumm PVAF @ 7.75% for 10 year (b) 6.7864
Equaity annual Installment (a/b) in million                              15.86
$ in millon
Year Annual Installalment
( C)
Principal
(C-B)
Yearly Interest (B=AX7.75%) Outstanding Loan Amount (A)
$107.60
1 $15.86 $7.52 $8.34 $100.08
2 $15.86 $8.10 $7.76 $91.98
3 $15.86 $8.73 $7.13 $83.24
4 $15.86 $9.41 $6.45 $73.83
5 $15.86 $10.14 $5.72 $63.70
6 $15.86 $10.92 $4.94 $52.77
7 $15.86 $11.77 $4.09 $41.00
8 $15.86 $12.68 $3.18 $28.32
9 $15.86 $13.67 $2.19 $14.66
10 $15.86 $14.72 $1.14 -$0.07
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