Question
Barry Rich is a business major at State U. He will be graduating this year and is planning to start a consulting business. He will
Barry Rich is a business major at State U. He will be graduating this year and is planning to start a consulting business. He will need to purchase computer equipment that costs $26,000. He can borrow the money from the local bank but will have to make annual payments of principal and interest. |
To determine the appropriate discount factor(s) using tables, click here to view Tables I, II, III, or IV in the appendix. Alternatively, if you calculate the discount factor(s) using a formula, round to six (6) decimal places before using the factor in the problem. |
Required |
a. | Compute the annual payment Barry will be required to make on a $26,000, four-year, 6 percent loan. (Round your answer to the nearest dollar amount.) |
b. | If Barry can afford to make annual payments of $5,500, how much can he borrow? (Round your answer to the nearest dollar amount.) |
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