| NEWS has decided to purchase a new parcel of land in order to expand operations into a brand-new facility and retake the competitive advantage. | ||||||||||
| The Amortization Schedule below has been generated for your use in this assignment and in future professional/personal endeavors. | ||||||||||
| NOTE: Payment is calculated by using the PMT function in Excel, based on a given interest rate, total periods, present value borrowed (-), and future value | ||||||||||
| Question 1: NEWS would like to compare two different parcels, each of which is tied to a specific lender and the lender’s terms. | ||||||||||
| Parcel GREEN has the following conditions: Cost = $ 10,000,000; Annual Interest Rate = 11%; Loan Term = 25 Years | ||||||||||
| Parcel BLUE has the following conditions: Cost = $ 7,500,000; Annual Interest Rate = 20%; Loan Term = 15 Years | ||||||||||
| Provide your recommendation on which option is the best option and why. | ||||||||||
| ANSWER: | ||||||||||
| Question 2: How does your answer change if NEWS is concerned with short-term profit margins? | ||||||||||
| How does your answer change if NEWS is concerned with long-term debt, due to a poor book value rating from the most recent stock analyst? | ||||||||||
| ANSWER: | ||||||||||
| Amount Borrowed (Present Value) | Amount Borrowed (Present Value) | |||||||||
| Future Value | $ – 0 | Future Value | $ – 0 | |||||||
| Years | Years | |||||||||
| Payments per Year | 12 | Payments per Year | 12 | |||||||
| Total Periods | 0 | Total Periods | 0 | |||||||
| Annual Interest Rate | Annual Interest Rate | |||||||||
| Compound Rate | 0.00% | Compound Rate | 0.00% | |||||||
| Payment Amount | ERROR:#NUM! | Payment Amount | ERROR:#NUM! | |||||||
| Payment Number | Payment | Interest | Principal | Balance | Payment Number | Payment | Interest | Principal | Balance | |
| 1 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 1 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 2 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 2 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 3 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 3 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 4 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 4 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 5 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 5 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 6 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 6 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 7 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 7 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 8 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 8 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 9 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 9 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 10 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 10 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 11 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 11 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 12 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 12 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 13 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 13 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 14 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 14 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 15 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 15 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 16 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 16 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 17 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 17 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 18 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 18 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 19 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 19 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 20 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 20 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 21 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 21 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 22 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 22 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 23 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 23 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 24 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 24 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 25 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 25 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 26 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 26 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 27 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 27 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 28 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 28 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 29 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 29 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 30 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 30 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 31 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 31 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 32 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 32 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 33 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 33 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 34 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 34 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 35 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 35 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 36 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 36 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 37 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 37 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 38 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 38 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 39 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 39 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 40 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 40 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 41 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 41 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 42 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 42 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 43 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 43 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 44 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 44 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 45 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 45 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 46 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 46 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 47 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 47 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 48 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 48 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 49 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 49 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 50 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 50 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 51 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 51 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 52 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 52 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 53 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 53 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 54 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 54 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 55 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 55 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 56 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 56 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 57 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 57 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 58 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 58 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 59 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 59 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 60 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 60 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 61 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 61 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 62 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 62 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 63 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 63 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 64 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 64 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 65 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 65 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 66 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 66 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 67 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 67 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 68 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 68 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 69 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 69 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 70 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 70 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 71 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 71 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 72 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 72 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 73 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 73 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 74 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 74 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 75 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 75 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 76 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 76 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 77 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 77 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 78 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 78 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 79 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 79 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 80 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 80 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 81 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 81 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 82 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 82 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 83 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 83 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 84 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 84 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 85 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 85 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 86 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 86 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 87 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 87 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 88 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 88 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 89 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 89 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 90 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 90 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 91 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 91 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 92 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 92 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 93 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 93 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 94 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 94 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 95 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 95 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 96 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 96 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 97 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 97 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 98 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 98 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 99 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 99 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 100 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 100 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 101 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 101 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 102 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 102 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 103 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 103 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 104 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 104 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 105 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 105 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 106 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 106 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 107 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 107 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 108 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 108 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 109 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 109 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 110 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 110 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 111 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 111 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 112 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 112 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 113 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 113 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 114 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 114 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 115 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 115 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 116 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 116 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 117 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 117 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 118 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 118 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 119 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 119 | $0.00 | $ – 0 | $0.00 | $ – 0 | |
| 120 | $0.00 | $ – 0 | $ – 0 | $ – 0 | 120 | $0.00 | $ – 0 |
