Big John Sipes, owner of Sipes’s Sipping Shine, has decided to replace the distillation system his company now uses. After some research, he finds an acceptable distiller that costs $62,500. The current machine has approximately 1200 lbs. of copper tubing that can be salvaged and sold for $4.75/lb. to use as a down payment on the new machine. The remaining components of the distillation machine can be sold as scrap for $3000. This amount will also be used to pay for the replacement equipment. The remaining money will be obtained through a 10-year mortgage with quarterly payments at an interest rate of 8%. Determine the quarterly payment required to pay off the mortgage. Also determine the effective interest rate on the loan.
Big John Sipes, owner of Sipes’s Sipping Shine, has decided to replace the distillation system his company now uses. After some research, he finds an acceptable distiller that costs $62,500. The current machine has approximately 1200 lbs. of copper tubing that can be salvaged and sold for $4.75/lb. to use as a down payment on the new machine. The remaining components of the distillation machine can be sold as scrap for $3000. This amount will also be used to pay for the replacement equipment. The remaining money will be obtained through a 10-year mortgage with quarterly payments at an interest rate of 8%. Determine the quarterly payment required to pay off the mortgage. Also determine the effective interest rate on the loan.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
