Question

Your company has a $250,000 loan for a new CNC-machine it just purchased. The interest rate is 6% per year for 25 years and the annual payment is calculated as $X. Your company now has decides that it can afford to pay more than $X per year. Based on the original payment plan (6% annual rate, 25 years), what is the value of X, i.e., the original annual payment = ? Annual payment is made at the end of each year. If your company decides to increase its annual payment to $25,000., how many years will the loan be paid off? Assume annual payment is made at the end of each year and the interest rate is still 6% per year. Continue on part (b), how much is the last payment?



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