   Chapter 12.III, Problem 10TIE ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

#### Solutions

Chapter
Section ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

# Apex Manufacturing recently purchased a new computer system for $150,000. What amortization payment is required each month at 12% interest to pay off this obligation in 8 years? To determine To calculate: The amount of loan payment to be made by Apex manufacturing for taking a loan of$150,000 for the purchase of new computer system to be made at the end of every month at 12% interest in 8 years.

Explanation

Given Information:

Payment frequency is 1 months, time duration is 8 years, nominal rate of return is 12% and interest is compounded monthly and present value amount is $150,000. Formula used: The formula to compute the amortization payment is, Amortization payment=PV×i1(1+i)n Where, PV is the present value, i is the interest rate per period, n is the number of periods. Calculation: Consider that Payment frequency is 1 months, time duration is 8 years, nominal rate of return is 12% and interest is compounded quarterly and present value amount is$150,000.

The rate period is 1% or 0.01(12%÷12 period per year).

The number of periods is 96(8 years×12 period per year)

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