About AirJet Best Parts, Inc. AirJet Best Parts, Inc. is a company dedicated to
ID: 2671754 • Letter: A
Question
About AirJet Best Parts, Inc.AirJet Best Parts, Inc. is a company dedicated to the design and manufacturing of aviation and airplane technologies and parts. The company has commercial and military clients worldwide.
Task 1: Assessing loan options for AirJet Best Parts, Inc.
The company needs to finance $8,000,000 for a new factory in Mexico. The funds will be obtained through a commercial loan and by issuing corporate bonds. Here is some of the information regarding the APRs offered by two well-known commercial banks.
Bank APR Number of Times Compounded
National First Prime Rate 6.75% Semiannually
Regions Best 13.17 Monthly
3. AirJet Best Parts, Inc. has decided to take a $6,950,000 loan being offered by Regions Best at 8.6% APR for 5 years. What is the monthly payment amount on this loan? Do you agree with this decision? Explain your rationale.
Explanation / Answer
Loan= $ 6,950,000
APR= 8.6%
MONTHYL INETEREST ARTE =0.7167%
TERM OF LAON=5 YEARS= 60 MONTHS
MONTHLY PAYMENTS PMT= $ 142,926.43
IN COMPARING THE INETREST RATES OFFERED BY NATIONAL FIRST BANK OD 10% TO REGIONS OF 8.6% ..
REGINS BEST ALLOWS FOR LOWER INTEREST PAYMNETS EVEN IF THE LAON IS COMPONDED MONTHLY
AIR JET MADE THE RIGHT DECISION TO GET LOAN FROM THE REGIONS BEST BECAUSE OTS MONTHLY PAYMENTS WOULD BE LOWER AT $142 ,926.43 BASED ON AN APR OF 8.6% , COMPONDEDE MONTHLY. AS OPPOSED TO ALOAN FROM NATIONAL FIRST WHCIH WOULD RESULT IN MONTHLY PAYMNET OF 4 147,666.96 BASED ON GIVEN OF 10% ASSUMING IT IS COMPONDED MONTHLY .BY GOING FOR LOAN WITH REGIONS BEST JET IA ABLE TO MINIMIZE ITS MONTHLY INTEREST PAYMENT BY $ 4740.53 DOLLARS
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