5. A bank gives a loan to a company to purchase an equipment worth P1,000,000 at an interest rate of 18% compounded annually. This amount should be repaid in 15 yearly equal installments. Find the installment amount that the company has to pay to the bank.
5. A bank gives a loan to a company to purchase an equipment worth P1,000,000 at an interest rate of 18% compounded annually. This amount should be repaid in 15 yearly equal installments. Find the installment amount that the company has to pay to the bank.
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 9P
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Step 1
Formula for calculating the installment amount is:
EMI formula = [P*r*(1+r)^n]/[(1+r)^n - 1]
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