Windsor Tool Inc. has a $500,000 loan for a new EDM machine to be used in the tool/die production. The interest rate for this loan is 6% compounded annually. The finance manager decides that the company will make $40,000 payment each year, starting the end of the first year. By calculation, it will take the company N years to pay back the loan. Notice that the payments for Year1 to Year(N-1) will be $40,000 as planned. The last payment at the end of Year-N will be smaller than $40,000. First, calculate the value for N=? (years) Second, calculate the last payment for Year(N)=? Notice that this is a Multi-Answer question, you have to pick one for the number of years and pick one for the last payment amount. N=22 Years N=24 Years N=26 Years N=28 Years Payment for last Year = $31,905. Payment for last Year = $16,794. Payment for last Year = $10,540. Payment for last Year = $36,555
Windsor Tool Inc. has a $500,000 loan for a new EDM machine to be used in the tool/die production. The interest rate for this loan is 6% compounded annually.
The finance manager decides that the company will make $40,000 payment each year, starting the end of the first year. By calculation, it will take the company N years to pay back the loan. Notice that the payments for Year1 to Year(N-1) will be $40,000 as planned. The last payment at the end of Year-N will be smaller than $40,000.
First, calculate the value for N=? (years)
Second, calculate the last payment for Year(N)=?
Notice that this is a Multi-Answer question, you have to pick one for the number of years and pick one for the last payment amount.
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N=22 Years |
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N=24 Years |
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N=26 Years |
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N=28 Years |
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Payment for last Year = $31,905. |
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Payment for last Year = $16,794. |
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Payment for last Year = $10,540. |
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Payment for last Year = $36,555. |
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