"Snick’s Board Shop is considering several alternative means of financing anexpansion. One alternative is to borrow $65,000 from a local bank, but anotheralternative is to borrow this amount from investors by issuing bonds. Both alter-natives involve a 2-year debt period with monthly payments. Modify the work-book ch5–07 to compute a loan and bond analysis, naming and formatting cellranges as appropriate.
Assume an initial loan rate of 6 percent, an initial bondstated rate of 6 percent, and a market interest rate of 5.5 percent.a.Print the newly completed loan and bond worksheets in Value view,with your name and date printed in the lower left footer and the filename in the lower right footer.b. Use the Scenario Manager to create two loan scenarios called BestCase and Worst Case. In the Best Case, the rate would be 5 percentand the loan amount would be $75,000; in the Worst Case, the ratewould be 7 percent and the loan amount would be $60,000. (Hint:You’ll need to place two cell references, separated by a comma, in theChanging cells: text box.) The resulting comparison values you’re try-ing to predict are Payment, Total Payments, and Total Interest. Printthe resulting summary worksheet.c. Use the Scenario Manager to create two bond scenarios called BestCase and Worst Case. In the Best Case, the market rate would be4 percent and the stated rate would be 5 percent.
In the Worst Case, themarket rate would be 7.5 percent and the stated rate would be 7 percent.(Again, you’ll need to place two cell references, separated by a comma,in the Changing cells: text box.) The resulting comparison values you’retrying to predict are Proceeds, Total Interest Payments, and TotalInterest Expense. Print the resulting summary worksheet.""d. Use Excel’s goal seek feature to calculate the interest rate that thecompany would have to negotiate under the original loan analysis (inpart a) to achieve a monthly payment of $2,750. Round the interestin Valuerate to two decimal places. Printthe resulting worksheet""view, with your name and date printed in the lower left footer and thefile name in the lower right footer.e. Use Excel’s goal seek feature to calculate the market rate necessary toachieve bond proceeds of $67,000. Round the interest rate to two dec-imal places. Print the resulting worksheet in Value view, with yourname and date printed in the lower left footer and the file name in thelower right footer."
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