QUESTION 28 [Bonus Points Problem] You want to purchase a convenience store. You
ID: 2771542 • Letter: Q
Question
QUESTION 28
[Bonus Points Problem] You want to purchase a convenience store. You have saved $10,000 to buy a business. A bank will make you a loan at 10% annual interst with annual end-of-year payments for 20 years. You think you can make annual payments of $16,000. You found a store for sale for $150,000. You ___ be able to purchase the store because ____.
would; you would have at least $916,000
would; you would have at least $330,000
would not; you have about $126,000
would not; you would have about $146,000
a.would; you would have at least $916,000
b.would; you would have at least $330,000
c.would not; you have about $126,000
d.would not; you would have about $146,000
Explanation / Answer
Annual payment:
= [P×r×(1+r)^n]÷[(1+r)^n-1]
$16,000 = [P×10%×(1+10%)^20]÷[(1+10%)^20-1]
Loan amount, P = $136,217
Total money available for purchase = $146,217
Hence, correct option is (d)
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.