Question

1. Cincinatti Milicron is an important manufacturer of tools. You choose to purchase one of their Low Pressure Injection Moulding machines to increase your production facilities. It costs 1500000 cu. Transportation from the US adds a further 30000 cu, and installation costs amount to 50000 cu. These additional costs will be financed as part of the purchase costs. You will use a business loan at 7%, charged over 10 years.

How much is each monthly payment?

2. From the above question, how much capital will be repaid in month 92?

What excel formula would you use for the 2nd question and how would it be filled.

Answer 1

1-	Monthly payment =Using PMT function in MS excel	pmt(rate,nper,pv,fv,type) rate =7%/12 =.5833% nper =12*10 =120 pv =1580000 fv=0 type =0	PMT(0.5833%,120,1580000,0,0)	($18,344.8)
2-	How much capital repaid in Month 92 =Using PPMT function in MS excel	PPMT(rate,per,nper,pv,fv) =rate =7%/12 =.5833% per =92 nper =10*12 =120 pv = 1580000 fv =0	PPMT(7%/12,92,120,1580000,0)	($15,497.7)
PPMT function in Excel would be used to find out the balance in 92 monthly payment