Cooley landscaping needs to borrow $34,000 for a new front-end dirt loader. The
ID: 2701091 • Letter: C
Question
Cooley landscaping needs to borrow $34,000 for a new front-end dirt loader. The bank is willing to loan the money at 9% interest for the next 5 years with annual, semiannual, quarterly or monthly payments. What are the different payments that Cooley landscaping could choose for these 3 different payments plans?Cooley landscaping needs to borrow $34,000 for a new front-end dirt loader. The bank is willing to loan the money at 9% interest for the next 5 years with annual, semiannual, quarterly or monthly payments. What are the different payments that Cooley landscaping could choose for these 3 different payments plans?
Explanation / Answer
Annual Payments = $30,000 / [(1 – 1/(1.085)10) / .085] = $30,000 / 6.5613 = $4,572.23
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Semi annual Payments = $30,000 / [(1 – 1/(1 +.085/2)10x2) / .085/2] = $30,000 /13.2944 = $2256.60
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Quarterly Payment=$30,000/{11/[1+(0.085/4)]^10×4}/(0.085/4)
Quarterly Payment=$30,000/26.7653=$1,120.86
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Monthly Payment=$30,000/{11/[1+(0.085/12)]^10×12}/(0.085/12)
Monthly Payment=$30,000/80.6545=$371.96