Please show work 24) The manager of a small cleaning company applies for a $20,0

Question

Please show work

24)

The manager of a small cleaning company applies for a $20,000 loan at an interest rate of 8% per year. He will repay the loan over 6 years with annual payments. The third through sixth payments are $1000 greater than the first two. Determine the size of the first (end of period 1) payment.

25)

ind the modified internal rate of return for the following cash flow using a financing rate of 6% and an investing rate of 12%.

Explanation / Answer

Let size of the first (end of period 1) payment = x

20000 = x/1.08 + x/1.08^2 + (x+1000)/1.08^3+ (x+1000)/1.08^4 + (x+1000)/1.08^5 + (x+1000)/1.08^6

20000 = x*(1-1/1.08^6)/8% + 1000/1.08^3 + 1000/1.08^4 + 1000/1.08^5 + 1000/1.08^6

X=    3,712.06

size of the first (end of period 1) payment= $3,712.06

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