Question

use tables and cash flow diagram: Gesky Industrial Products manufactures brushless blowers for boilers, food service equipment, kilns, and fuel cells. The company borrowed $18,000,000 for a plant expansion and repaid the loan in seven annual payments of $3,576,420, with the fi rst payment made 1 year after the company received the money. What was the interest rate on the loan? Use hand and spreadsheet solutions.

Answer #1

Total
Borrowings |
1,80,00,000 |

Year |
Payment |

1 | 35,76,420 |

2 | 35,76,420 |

3 | 35,76,420 |

4 | 35,76,420 |

5 | 35,76,420 |

6 | 35,76,420 |

7 | 35,76,420 |

Total
Paid |
2,50,34,940 |

Interest
Paid |
70,34,940 |

Yearly
Payment |
10,04,991 |

Rate of Interest
(%) |
5.58 |

Consider the table above for the solution to the question. The rate of interest paid on the loan comes out to 5.58% simple interest.

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