Question

# Oxygen Optimization just bought a new filtration system for 167,300 dollars. To pay for the filtration...

Oxygen Optimization just bought a new filtration system for 167,300 dollars. To pay for the filtration system, the company took out a loan that requires Oxygen Optimization to pay the bank a special payment of 101,000 dollars in 5 year(s) and also make regular annual payments forever. The first regular payment is expected in 1 year and is expected to be 1,800 dollars. All subsequent regular payments are expected to increase by a constant rate each year forever. The interest rate on the loan is 15.48 percent per year. What is the annual growth rate of the regular payments expected to be? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.

#### Homework Answers

Answer #2
 A Amount of loan \$167,300 B Special payment after 5 years \$101,000 C Interest rate=15.48%= 0.1548 D=B/((1+C)^5) Present Value of Special payment \$              49,179.88 E=A-D Balance amount of Loan \$118,120.12 F First Instalment to be paid year1 \$1,800 g Rate of growth of payment=g Present Value of annual payment: P0 P0=F/(C-g) P0 P0=1800/(0.1548-g)=\$118,120.12 0.1548-g=1800/118120.12= 0.015238725 g=0.1548-0.15238725= 0.139561275 Annual Growth Rate 0.1396
answered by: anonymous
Know the answer?
Your Answer:

#### Post as a guest

Your Name:

What's your source?

#### Earn Coins

Coins can be redeemed for fabulous gifts.

##### Not the answer you're looking for?
Ask your own homework help question
ADVERTISEMENT
##### Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

ADVERTISEMENT
##### Active Questions
• Shell script: Obtain IP Address of a Network Interface: User input interface Output should be: \$...
asked 11 minutes ago
• QUESTION 10 In calorimetry experiment, 0.30g of bagle was burned which increased water temperature from 22.3...
asked 11 minutes ago
• Consider all the cells in your body, or that of a donkey, iguana or sparrow. Which...
asked 17 minutes ago
• The region inside of the two ridge lines in the isoquant diagram is: Answers: a) where...
asked 19 minutes ago
• Fatty acids that are ester-bonded to glycerol (as glycerol-3-phosphate membrane lipids) can be found in all...
asked 21 minutes ago
• There are four sites that need to be connected. Seoul, Tokyo, Honolulu and Auckland. There are...
asked 28 minutes ago
• Which of the following is true? a) If one country has an absolute disadvantage in one...
asked 31 minutes ago
• In an effort to promote a new product, a marketing firm asks participants to rate the...
asked 31 minutes ago
• What is a NON-NEGATIVEversus UNRESTRICTED DISTRIBUTION, give an example? What does the COMMAND RAND()provide in Excel?...
asked 36 minutes ago
• COVID-19 is caused by infection with the SARS-CoV-2 virus. This virus can infect the type II...
asked 36 minutes ago
• Each year, Sunshine Motos surveys 7,500 former and prospective customers regarding satisfaction and brand awareness. For...
asked 40 minutes ago
• Many global organizations are ISO certified. Specifically, ISO 14001 addresses the elements of responsible operation toward...
asked 43 minutes ago