Question
Assume you borrow $25,000 student loan from Keystone Bank with 7 years to maturity. To pay back to the loan, you decide to payback Keystone
Assume you borrow $25,000 student loan from Keystone Bank with 7 years to maturity. To pay back to the loan, you decide to payback Keystone Bank $2500 after 1 year (i.e., at the end of year 1), payback $5000 after 2 year, and payback $7500 after 3 year. After that, you plan to pay back an amount, $W, each year at the end of years 4-7. Assume that the interest rate is 8 percent. How much is the annual payment amount $W that will allow you to pay back student loan throughout the 7-year period?
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DaVi Co. plans to purchase a new machine. This new machine will need initial investment of $30,000 now and required $60,000 per year to operate. If the interest rate is 10% and if the machine will last for five years, how much is the equivalent annual annuity of this new machine?
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