Answer The Following
You are offered an add-on loan for $4,500 at 18% for 5 years.
- What is the monthly payment?
- What is the amount of interest?
- What is the true interest rate cost of this loan?
If you could pay the same loan above at a compound rate,
- What would the monthly payment be?
- What would the amount of interest be?
- Prepare a monthly payment schedule for each loan above using Excel, and submit it.
- Suppose that you are only allowed to make a balloon payment to the principal of the compound interest loan. You have $1,000 to put down at the beginning of year 3. How many payments will you save?
- Spotify is a new model of music consumption. Its prospects are uncertain and its licensing costs, for content, are high. Yet VCs have rushed in and become stakeholders hoping for a hit. Spotify would not have expanded in Europe or the United States without venture capital. Research Spotify on Crunchbase and see how it raised money. Attempt to draw Spotify’s J-Curve graph. When did the business start, and where is it today? Think of some of the metrics that were given above. Do you think Spotify has reached its peak cash need? Why or why not?