How do you solve this on excel? Rewash Inc., would like to purchase a machine at
ID: 2655764 • Letter: H
Question
How do you solve this on excel?
Rewash Inc., would like to purchase a machine at a cost of $200,000 with a life of 6 years. Their bank is ready to finance 90% of the machine at a rate of 7% per year compounded weekly if Rewash agrees to a payment of $1,500 per month and the remaining as a balloon payment at the end of the machine life. What is the balloon that Rewash Inc., will have to pay?
$140,063
Rewash Inc., would like to purchase a machine at a cost of $200,000 with a life of 6 years. Their bank is ready to finance 90% of the machine at a rate of 7% per year compounded weekly if Rewash agrees to a payment of $1,500 per month and the remaining as a balloon payment at the end of the machine life. What is the balloon that Rewash Inc., will have to pay?
Right Answer:$140,063
Explanation / Answer
Purchased price $200,000.00 Less: Down Payment $20,000.00 Amount Borrowed = PV $180,000.00 Rate = 7.01572%/12 0.58% Period = 6 years x 12 months 72 PMT $1,500.00 Future value of Machine = FV(.58%,72,1500,-$180000) $140,063.00 7% compound weekly is equivalent to 7.01572% compound monthly (APR) or 0.58464% interest every month. Exact answer will be 140068.06 but if we rounded to.58% answer will be 140,063
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