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Riverbed Corp purchased a new blending machine for $3,050.01. It paid $520.22 down and financed the...

Riverbed Corp purchased a new blending machine for $3,050.01. It paid $520.22 down and financed the remaining $2,529.79. It is required to pay 7 annual payments at the end of each year at an annual rate of interest of 11%. Click here to view the factor table. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) What is the amount of the annual payment? (Round answer to 2 decimal places, e.g. 15.25.) Amount of the annual payment?

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Answer #1

Amount Financed = $2,529.79

Annual Rate of Interest = 11%

Period = 7 years

Annuity factor of 11% for 7 years = 4.712196 i.e 4.71220

Amount Financed = Annual Payments * Annuity factor

Annual Payments = Amount Financed / Annuity Factor

Annual Payments = $2,529.79 / 4.71220

= $536.86

Note: The factor table to be used in solving question is not provided. Hence I have calculated the factor. Please verify the factor used from your factor table. If there is any sort of rounding off difference in factor table, then please use your factor and calculate the annual payments in the same way as calculated above

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