Sarasota Corp. purchased a new blending machine for $3,150.03. It paid $570.27 down and financed the...
Sarasota Corp. purchased a new blending machine for $3,150.03. It paid $570.27 down and financed the remaining $2,579.76. It is required to pay 6 annual payments at the end of each year at an annual rate of interest of 7%.
What is the amount of the annual payment? (Round answer to 2 decimal places, e.g. 15.25.)
Homework Answers
| Annual payment | = | Loan amount / Present value of annuity of 1 | |||||
| = | $ 2,579.76 | / | 4.76654 | ||||
| = | $ 541.22 | ||||||
| Working: | |||||||
| Present value of annuity of 1 | = | (1-(1+i)^-n)/i | Where, | ||||
| = | (1-(1+0.07)^-6)/0.07 | i | 7% | ||||
| = | 4.7665397 | n | 6 | ||||
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