25. Tim borrowed $3,000 to purchase a computer. The loan is to be repaid in 3 eq

Question

25. Tim borrowed $3,000 to purchase a computer. The loan is to be repaid in 3 equal annual end of year installments. The interest on loan is 10%, compounded annually. What is the loan payment per year? (Points : 3.5)       

A. $1,206.34
B.    $1000.00
C.    $1,987.10
D.       None of the above

Question 26. 26. The Podrasky Corporation is considering an $80 million expansion (capital expenditure) program next year. The company wants to determine approximately how much additional financing will be needed if the expansion program is undertaken. Next year the company expects to earn $55 million after interest and taxes. The company also plans to increase its dividends from $10 million to $15 million. If the expansion program is accepted, the company expects its current assets needs to increase by approximately $25 million next year. Long-term debt retirement obligations total $2 million next year and depreciation is expected to be $20 million. No fixed assets are expected to be sold next year. (Points : 3.5)    A.    $28 million
   B.    $33 million
   C.    $47 million
    D.   $38 million

Explanation / Answer

25. Tim borrowed $3,000 to purchase a computer. The loan is to be repaid in 3 equal annual end of year installments. The interest on loan is 10%, compounded annually. What is the loan payment per year? (Points : 3.5)

Loan payment per year = pmt(rate,nper,pv,fv)

rate = 10%

nper = 3

pv = 3000

fv = 0

Loan payment per year = pmt(10%,3,-3000,0)

Loan payment per year = $ 1206.34

Answer

A. $1,206.34

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