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3 Amortization Schedules

NOTE: There are two attached files:
1. The problem to be solved (to complete 3 amortization schedules)
2. An example amortization schedule (EXCEL file) that has been provided as a guide.

QUESTION:
The proposal under review is the special manufacturing project that we have been evaluating for the last week. So, the funds that are borrowed will be used to pay for the special project. This does not address the merger. The local branch of the Swiss bank can also place this loan in Euros, so the deal can be placed in Swiss francs or Euros, so you will analyze this deal in Swiss Francs and Euros and US dollars.

OBJECTIVE:
1. Please analyze the following funding sources for the Special project based on the Foreign Denominated Loan assumptions in the appendix below. You will assume that the loan can be made in the following currencies:
a. In Swiss Francs
b. In Euros
c. In US dollars

You will provide 3 excel worksheets:
a. Prepare loan amortization schedules for the Swiss bank loan in US$ and
and Swiss francs converted to US$.
b. Then prepare a loan amortization schedule in Euros for the loan amount converted to US$.
c. Prepare a loan amortization schedule in US $
The purpose of the three schedules is to compare all three in US$ which shows you the currency exchange impact.
d. So, you will submit three loan amortization schedules.
e. For the Swiss Franc and Euro exchange rates, you will start with the current exchange rate. There are exchange rates that are listed in the case appendix. YOU WILL NOT use these rates because at those dates, the Euro was unavailable, so the start date for the loans is Monday, October 2nd.
For the Euro exchange rate compared to the dollar, please also use the start date of the loans - Monday, Oct 2nd.

Appendix
Initial investment $6.25 million
Interest rate 6.75%
Repayment of principal per year (% of loan) 10.00%
Total term of loan (years) 10 years
Payments Annual
Payment Date December
Payment currency Swiss Franc, Euro, and US$

Attachments

Solution Preview

a. Prepare loan amortization schedules for the Swiss bank loan in US$ and
and Swiss francs converted to US$.

1 US$ = 1.2436 Swiss Franc
1 Swiss Franc = 0.8041 US$

Amortization Schedule
loan amortization schedule in Swiss Franc G = E * F I= G * H
Period Swiss francs Principal Balance Principal Payments Interest at 6.75% per year Total Payments Discount Rate = 6.75% Actual Table Factors Payments * Discount Rate= PV in $ Swiss francs per $1 Converted to US$
1 7772500.00 777250.00 524643.75 1301893.75 0.9368 1219614.07 0.8041 980,691.67
2 6995250.00 699525.00 472179.38 1171704.38 0.8775 1028170.59 0.8121 835,019.49
3 6295725.00 629572.50 424961.44 1054533.94 0.8220 866826.90 0.8203 711,025.52
4 5666152.50 566615.25 382465.29 949080.54 0.7700 730792.02 0.8285 605,435.63
5 5099537.25 509953.73 344218.76 854172.49 0.7214 616200.03 0.8367 515,605.18
6 4589583.53 458958.35 309796.89 768755.24 0.6758 519524.79 0.8451 439,059.33 ...

Solution Summary

This solution is comprised of a detailed explanation to complete 3 amortization schedules.

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