Question

Cooley Landscaping Company needs to borrow $21,000 for a new front-end dirt loader. The bank is...

Cooley Landscaping Company needs to borrow $21,000 for a new front-end dirt loader. The bank is willing to loan the funds at 8% interest with annual payments at the end of the year for the next 8 years. What is the annual payment on this loan for Cooley Landscaping?
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
We can use the present value of annuity formula to find out the annual payment for this loan for Cooley Landscaping.
Present value of annuity = P x {[1 - (1+r)^-n]/r}
Present value of annuity = Loan amount = $21000
P = Annual loan payment = ?
r = rate of interest per year = 8%
n = number of annual loan payments = 8
21000 = P x {[1 - (1+0.08)^-8]/0.08}
21000 = P x 5.746639
P = 3654.31
Annual payment on this loan for Cooley Landscaping = $3654.31
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Payments. Cooley Landscaping Company needs to borrow ​$29,000 for a new​front-end dirt loader. The bank is...
Payments. Cooley Landscaping Company needs to borrow ​$29,000 for a new​front-end dirt loader. The bank is willing to loan the funds at 8.5​% interest with annual payments at the end of the year for the next 7 years. What is the annual payment on this loan for Cooley​ Landscaping? What is the annual payment on this loan for Cooley​ Landscaping? $ :
1) Sam​ Hinds, a local​ dentist, is going to remodel the dental reception area and add...
1) Sam​ Hinds, a local​ dentist, is going to remodel the dental reception area and add two new workstations. He has contacted​ A-Dec, and the new equipment and cabinetry will cost $16,000. The purchase will be financed with an interest rate of 9% loan over 9 years. What will Sam have to pay for this equipment if the loan calls for quarterly payments (4 per year) and monthly payments (12 per year)? Compare the annual cash outflows of the two...
A construction firm needs a front-end loader. The loader can be leased from the dealer for...
A construction firm needs a front-end loader. The loader can be leased from the dealer for 3 years for $7,400 per year including all maintenance, or it can be purchased for $30,000. The firm expects the loader to have a salvage value of $7,500 after 7 years. Maintenance will cost $750 in the first year and increase by $350 each year. The firm’s interest rate is 10% per year. a) What is the EUAC for leasing the loader ($/year)? b)...
A heavy construction company plans to purchase a front loader with a price tag $90,000.The company...
A heavy construction company plans to purchase a front loader with a price tag $90,000.The company plans to finance the purchase with a loan. The stipulates uniform monthly payment at 6% annual percentage rate (APR) for 5 years. a. What is the effective interest rate of the loan? b. What is the monthly payment?
To purchase a new loader it is necessary to borrow $18,550. A vendor representative offers a...
To purchase a new loader it is necessary to borrow $18,550. A vendor representative offers a 10-yr loan at an interest rate of 5% compounded annually. If you make annual payments at the end of each yr, repaying the principal and interest, what is the total annuity (A/P) that must be paid back? a)What is the number of time periods (n), rate of interest (i), per period of time, should be used in solving this problem? b)Is the present single...
You are the loan officer of a bank. The ABC Company wants to borrow $100,000 and...
You are the loan officer of a bank. The ABC Company wants to borrow $100,000 and repay it with four equal annual payments (first payment due one year from now). You decide that the ABC Company should pay 0.10 per year on the loan. a. What is the annual payment? b. Complete the following debt amortization table: Period Amount owed(beginnig of yr) Interest Principal Amount owed(end of yr) 1 $100,000 2 3 4 c. What would be the annual payment...
Your company is looking at purchasing a front-end loader and has narrowed the choice down to...
Your company is looking at purchasing a front-end loader and has narrowed the choice down to two loaders. The investment in the larger loader yields the NPV of $28,372. The smaller loader would have a useful life of five years with a salvage value of $10,000 at the end of the fifth year. The smaller loader can be billed out at $90.00 per hour. It costs $28 per hour to operate the smaller front-end loader and $25 per hour for...
Caylor Inc. needs to borrow $300,000 for the next 6 months. The company has a line...
Caylor Inc. needs to borrow $300,000 for the next 6 months. The company has a line of credit with a bank that allows the company to borrow funds with a 10% interest rate subject to a 25% of loan compensating balance. Currently, Caylor Inc. has no funds on deposit with the bank and will need the loan to cover the compensating balance as well as their other financing needs. How much will Caylor Inc. need to borrow? a. $330,000 b....
The purchase price of a front-end loader, including the tires, sales tax, and all other costs...
The purchase price of a front-end loader, including the tires, sales tax, and all other costs associated with its purchase, is $117,450. The life of the loader is 6 years, at which time it will have an estimated salvage value of $11,500. The replacement cost of the tires is $7,500 for all tires on the loader and is not to be included in the depreciation and interest cost. The loaders is expected to be used 1,200 hours per year. Determine...
Q2) An engineer borrowed $3000 from the bank, payable in six equal end-of-year payments at 8%....
Q2) An engineer borrowed $3000 from the bank, payable in six equal end-of-year payments at 8%. The bank agreed to reduce the interest on the loan if interest rates declined in the United States before the loan was fully repaid. At the end of 3 years, at the time of the third payment, the bank agreed to reduce the interest rate from 8% to 7% on the remaining debt. What was the amount of the equal annual end-of-year payments for...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT