Question
You have decided to purchase a manufacturing facility. You will use the accumulated balance in your retirement account as the down payment and borrow the
You have decided to purchase a manufacturing facility. You will use the accumulated balance in your retirement account as the down payment and borrow the remainder of the purchase amount.
The local bank has specified the following loan parameters: 10-year term, annual payments, 6.75% contract rate, and add on interest (i.e., total interest is added to the loan to determine the periodic payment amount). Information about your retirement account and the manufacturing facility appears below.
Retirement account
$2,080 periodic deposit x2 5
Quarterly deposits
Started 30 years ago
7.00% annual rate of return
Manufacturing facility
Daily production is 4.000 units
Price per unit is $2.25
Cost per unit is $1.25
Facility operates 250 days per year
Purchase price is 2.5 times annual gross revenue
Calculate the following numbers:
a.
Revenue per day
b. Cost per day
c. Net return per day
d. total revnue
e. total annual cost
f. Net return per year
g. Total purchase price of facility
h. Value of the retirement account
i. Amount borrowed
j.Amount of total interest due
k. Loan proceeds
1. Periodic loan payment amount
m. Actuarial interest rate
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