Mex, Inc. recently purchased a new machine costing $300,000. Thefirm financed this purchase at 6%...

Mex, Inc. recently purchased a new machine costing $300,000. The firm financed this purchase at 6% interest with monthly payments of $5,799.84. How many years will it take the firm to pay off this debt?

Solutions

Expert Solution

The number of years is computed as follows:

Plug the below variables in the financial calculator as follows:

PV = - 300,000

FV = 0

PMT = 5,799.84

I/Y = 0.50 (6 / 12)

Finally press CPT and then N. It will give N equal to 60 months. So, the number of years will be as follows:

= 60 / 12

= 5 years

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

The management of Villa Corporation is considering the purchase of a new machine costing $300,000. The...

The management of Villa Corporation is considering the purchase of a new machine costing $300,000. The residual value for the machine is estimated to be $0. The company’s desired rate of return is 8%. Estimated income and cash flow date for the project are as follows: Year Operating Income Net Cash Flow 1 $60,000 $80,000 2 $60,000 $80,000 3 $60,000 $80,000 4 $60,000 $80,000 5 $60,000 $80,000 The present value index (rounded to two decimal places) for this investment is:...

Palmetto Ag. Inc. recently purchased a new harvester. The new machine cost $180,000 and it is...

Palmetto Ag. Inc. recently purchased a new harvester. The new machine cost $180,000 and it is expected to generate net after-tax operating cash flows, including depreciation, of $50,000 per year. The machine has a five year expected life. The expected salvage values after-tax adjustments for the machine are given below, and the company’s WACC is 11%. Based on the information below, should the firm operate the machine until the end of its 5 year physical life? If not, then when...

Falco Inc. financed the purchase of a machine with a loan at 3.11% compounded monthly. This...

Falco Inc. financed the purchase of a machine with a loan at 3.11% compounded monthly. This loan will be settled by making payments of $9,100 at the end of every month for 7 years. a. What was the principal balance of the loan? Round to the nearest cent b. What was the total amount of interest charged? $0.00 Round to the nearest cent

You purchased a new house for $200,000 and financed the entire purchase with a $200,000 mortgage,...

You purchased a new house for $200,000 and financed the entire purchase with a $200,000 mortgage, payable monthly over 30 years at a yearly rate of 5.5%. How much are your monthly payments, assuming you made your first payment at the end of the first month?

You purchased a new house for $200,000 and financed the entire purchase with a $200,000 mortgage,...

You purchased a new house for $200,000 and financed the entire purchase with a $200,000 mortgage, payable monthly over 30 years at a yearly rate of 5.5%. How much do you owe on this house today after making 4 years of monthly payments?

You financed the purchase of a $300,000 apartment with a down payment in cash of 20%...

You financed the purchase of a $300,000 apartment with a down payment in cash of 20% of the purchase price. The remaining 80% is financed with a mortgage with a 1% monthly interest rate over the next 20 years. The mortgage is repaid with equal monthly installments. Compute the monthly installments on the mortgage. (5 points) What is the outstanding principal balance of the mortgage after 5 years (i.e., after 60 installments)? (5 points) Ten years later (after 120 installments),...

On January 1, Vixen, Inc. purchased a new sleigh packing machine, costing $62,500, by signing a...

On January 1, Vixen, Inc. purchased a new sleigh packing machine, costing $62,500, by signing a promissory note with 7-year, 4.75% terms with biannual payments. Show the entire amortization schedule and highlight the total, interest and principal payment for payment number 13. Also, specify what year/month this payment occurs. please show on excel

On January 1, Vixen, Inc. purchased a new sleigh packing machine, costing $62,500, by signing a...

On January 1st 2018, Box Inc. purchased a box-making machine for $300,000. They estimate that the...

On January 1st 2018, Box Inc. purchased a box-making machine for $300,000. They estimate that the machine has a service life of 7 years, and that the residual value of the machine at the end of its service life is $100,000. Box Inc uses the SYD method of depreciation for this machine. On Jan 1st 2022, Box Inc revises the estimated service life of the machine to 9 years, and reduces the estimated residual value to $50,000. Box Inc also...

Purchase price of a new machine is $84000 and the useful life of the machine is 6 years

Purchase price of a new machine is $84000 and the useful life of the machine is 6 years. At the end of 6 years salvage value of the machine is zero. Before tax earnings from the new machine is $18000 per year. The effective income tax rate is 40% and after tax MARR is 12% using the SL depreciation, show the before-tax and after-tax cash flows in a table and calculate after-tax IRR value for this investment. Is this a...

Subjects