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If you buy a factory for $100,000 and the terms are 25% down, the balance of...

If you buy a factory for $100,000 and the terms are 25% down, the balance of $75,000 to be paid off over 10 years at a 10% rate of interest on the unpaid balance, what are the 10 equal annual payments?

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Answer #1

Loan Amount = P = 75000

Interest Rate = r = 10%

Period = n = 10

Annual Payment Each Year = [Pr(1+r)n]/[(1+r)n-1]

= 75000*0.10*1.110/(1.110-1) = $12205.90

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