Question

QUESTION 50 If you buy a factory for $100,000 and the terms are 10% down, the balance of $90,000 to be paid off over 8 years at a 8% rate of interest on the unpaid balance, what are the 8 equal annual payments? O 13,921 15,661 O 16,413 O17,024 O 18,222

Answer 1

Unpaid Balance = Factory Price x (1 - Down Payment %)

= $100,000 x (1 - 0.10) = $90,000

Annuity = [PVA x r ] / [1 - (1 + r)^-n]

= [$90,000 x 0.08] / [1 + (1.08)^-8]

= $7,200 / 0.4597 = $15,661.33

Hence, Option "B" is correct.