Question

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 payments. Why does themonthly payment plan have less total cash outflow each​ year?

2) Cooley Landscaping needs to borrow $35,000 for a new​ front-end dirt loader. The bank is willing to loan the money at 9​%interest for the next 9 years with annual​,semiannual​, quarterly​ or monthly payments. What are the different payments that Cooley Landscaping could choose for these different payment​ plans?

Answer 1