Michael Jones has a weak heart. As a result, he can no longer swing an ax like h
ID: 2780083 • Letter: M
Question
Michael Jones has a weak heart. As a result, he can no longer swing an ax like he once did which is affecting his performance at Oz Corp Logging. He's worried that he may be fired soon due to his ailing health. As a last resort he pays a visit to the emerald-hued Elphaba and begs her to help him. She agrees to fashion him an artifical heart and to perform the necessary transplant. However, because he has no health insurance, Elphaba makes him an offer: she will do this for him for an upfront price of 13.5 million poppies. He doesn't have any poppies on hand so Elphaba agrees to let him finance his new heart by making yearly payments with an interest rate of 13%, with payments being made at the end of each year, over 25 year (i.e. the first payment is made at the end of year 1, and the last payment is made at the end of year 25).
Question: How many poppies must he harvest and present to Elphaba each year to pay the price, in full, that she requires for her services so as not to incur her wrath?
Explanation / Answer
Total Loan Amount =13,500,000 poppies
Time =25 years
Payments Frequency=Annual
Interest Levied =13%
Annual Payment required to be Made =PMT(0.13,300,13500000)
= 1,841,750
Hence, he need to pay annually 1.841 million poppies over next 25 years to payback.