Question
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
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 | $ |
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