Question
Asked Apr 2, 2019
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A company has just purchased a machine with a cost of $79,994, and signed a
note to pay the manufacturer equal semi-annual amounts of $9,378. If the
current rate of interest is 6%, how many equal payments will be made?
Select one:
O a. 5
O b. 6
O C. 8
O d. 10
O e. 12
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A company has just purchased a machine with a cost of $79,994, and signed a note to pay the manufacturer equal semi-annual amounts of $9,378. If the current rate of interest is 6%, how many equal payments will be made? Select one: O a. 5 O b. 6 O C. 8 O d. 10 O e. 12

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Expert Answer

Step 1

Present value: This is the amount of future value reduced or discounted at a rate of interest till particular current date.

Annuity: The fixed amount paid or received in equal time periods is referred to as annuity.

Step 2

Compute the number of payment periods.

Step 1: Create a new spreadsheet, save it, and input the data.

Step 2: Select cell B7 and click the function button (fx) to insert NPER function to compute number of periods.

Step 3: Click OK to select the NPER function. In the NPER function arguments window, the cursor automatically appears on the “Rate” field.

Step 4: Click on the cell B3 to select the value for “Rate” field. Since annual rate is 2 times of rate of interest, divide the value by 2.

Step 5: Place the cu...

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