Question

XYZ company used a loan of 7500000 TL from the bank for 10 years to purchase a CNC machine tool. For this loan, the bank will apply 20% interest for the first 3 years, 22% for the second three years and 26% for the last 4 years. The bought bench has 100000 TL repairs each year and 50000 TL maintenance expenses each year. At the end of 10 years
a) What is the total amount to be paid to the bank?
b) What are the repair and maintenance costs?
c) How much is the total expense?

Answer 1

Loan = 75,000,000 for 10 years

Rate of Interest for 0-3 years = 20%

Rate of Interest for 3-6 years = 22%

Rate of Interest for 6-10 years = 26%

Repair cost each year = 1,000,000 while maintenance cost each year = 50,000

a) Total amount to be paid to bank = 75,000,000 * (1 + 0.2)^³ * (1 + 0.22)^³ * (1 + 0.26)^⁴ = 593,152,291.80

b) Repair + Maintenance cost = 100,000 + 50,000 = 150,000

First repair cost will bear rate of interest for 9 out of which 20% for first 3 years, 22% for next 3 years and 26% for next 3 years.

Second repair cost will bear rate of interest for 8 out of which 20% for 2 years, 22% for next 3 years and 26% for 3 next years.

and so on.....

Year	Repair + Maintenance Cost	Years for which Cost is compounded	Future Value
1	150000	9	941512.6
2	150000	8	784593.8
3	150000	7	653828.2
4	150000	6	544856.8
5	150000	5	446603.9
6	150000	4	366068.8
7	150000	3	300056.4
8	150000	2	238140.0
9	150000	1	189000.0
10	150000	0	150000.0
			4,614,660.5

c) Total expense after 10 years = 593,152,291.80 + 4,614,660.5 = 597,767,582.3