bob buys a property for $140,000. He is offered a 25-year loan by the bank, at...

bob buys a property for $140,000. He is offered a 25-year loan by the bank, at an interest rate of 6.88% per year. What is the annual loan payment Dan must make? ________.

A businessman wants to buy a truck. The dealer offers to sell the truck for either $145,000 now, or 7 yearly payments of $24,000. What interest rate would make these two options financially equivalent?

Expert Solution

Q-1)

- Loan amount of Property = $140,000

Calculating the Annual Loan Payment using Excel "PMT" function:-

So, the annual loan payment Dan must make is $11,883.89

Q-2)

The dealer offers businessman an offer for either $145,000 now, or 7 yearly payments of $24,000.

Present Value to buy truck today = $145,000

Or, Yearly Periodic annuity payment for 7 years = $24,000

Puting both equivalent to calculate the interest rate using Exce "rate" function:-

So, interest rate would make these two options financially equivalent is 3.82%

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jeff jeffy answered 2 years ago

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