Your company will purchase equipment worth $11,000,000. You consider financing the purchase through a loan with a
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Question:
Your company will purchase equipment worth $11,000,000. You consider financing the purchase through a loan with a 5 year term that requires end of month payments. The loan is fully amortized at the end of the five year period. The APR is 8% (monthly compounding). | ||||||||||
a) What is the amount of the required monthly loan payments? | ||||||||||
b) What is the balance of the loan (amount still owed) at the end of 3 years? | ||||||||||
c) Another bank offers you a loan for the same amount and terms but with monthly payments of $220,000. What is the APR of this loan? |
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