Windsor Tool Inc. has a $600,000 loan for a new EDM machine to be used in the tool/die production. The interest rate for this loan is 5% compounded annually.

The finance manager decides that the company will make $40,000 payment each year, starting the end of the first year. By calculation, it will take the company N years to pay back the loan. Notice that the payments for Year1 to Year(N-1) will be $40,000 as planned. The last payment at the end of Year-N will be smaller than $40,000.

First, calculate the value for N=? (years)

Second, calculate the last payment for Year(N)=?

Notice that this is a Multi-Answer question, you have to pick one for the number of years and pick one for the last payment amount.

		N=27 Years
		N=29 Years
		N=31 Years
		N=33 Years
		Payment for last Year = $39,168.
		Payment for last Year = $16,794.
		Payment for last Year = $10,540.
		Payment for last Year = $36,555.