Karen Webb is a business major at State U. She will be graduating this year and is planning to start a consulting business. She will need to purchase computer equipment that costs $25,000. She 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 Karen will be required to make on a $25,000, four-year, 8 percent loan.(Round your answer to the nearest dollar amount. Omit the "$" sign in your response.)

Annual payment

$

(b)	If Karen can afford to make annual payments of $8,000, how much can she borrow? (Round your answer to the nearest dollar amount. Omit the "$" sign in your response.)

Borrowing

$