Essay on S & S Air Case Study

1483 Words Nov 4th, 2012 6 Pages
S & S Air:

Case Study: S & S Air’s Mortgage
3001-3 FNCE Financial Management
Week 4
William Jones October 9th, 2012
Case Study: S & S Air’s Mortgage

Background:
S&S Air manufactures light aircraft. The owners of S & S Air, Mark Sexton and Todd Story, were impressed by the work Chris had done on financial planning. By using Chris’s analysis and looking at the demand for light aircraft, they decided that their existing fabrication equipment was sufficient, but that it was time to acquire a bigger manufacturing facility (Ross, Westerfield, & Jordan, 2011, p. 161). Rather than building a new facility they have found a suitable building for renovation at an estimated expense of $22 million dollars. Mark and Todd
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How much of the first payment goes towards principal?
Answer: $21,485.52 Loan Amount $22,000,000.00 Interest Rate 0.061 Loan Term 30 Years or 360 Payments Loan Payment Monthly $ 133,318.85 Amortization Table: Month Beginning Total Interest Principal Ending Balance Payment Paid Paid Balance
1 $22,000,000.00 $ 133,318.85 $ 111,833.33 $ 21,485.52 $21,978,514.48
2 $21,978,514.48 $ 133,318.85 $ 111,724.12 $ 21,594.73 $21,956,919.75
3 $21,956,919.75 $ 133,318.85 $ 111,614.34 $ 21,704.51 $21,935,215.24
4 $21,935,215.24 $ 133,318.85 $ 111,504.01 $ 21,814.84 $21,913,400.40
5 $21,913,400.40 $ 133,318.85 $ 111,393.12 $ 21,925.73 $21,891,474.67
6 $21,891,474.67 $ 133,318.85 $ 111,281.66 $ 22,037.19 $21,869,437.48

Question #3: How long would it take for S&S Air to pay off the smart loan

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