Question

A Vending Machine costs P75.000 if paid in cash. On the installment plan, a purchaser should pay P40,000 down payment and 8 quarterly installments, the first due at the end of the first year after purchase. If money is worth 15% compounded monthly, determine the quarterly installment.

*CASH FLOW Diagram Needed

Answer 1

Answer to Question No. 1
Particulars	Amount(P)
Amount of loan financed- (Purchase amount- down payment)	35,000.00
No. Of quarterly instalment payments	8
Annual stated Rate (compounded monthly)	15.00%
Monthly interest rate	1.25%
Effective Quarterly Interest rate	3.80%
Future value after 9 month	39,140.23
Quarterly Instalments payment amount	5,764.80

Amortization table
Quarter	Interest expenses	Quarterly payment	Principle repayment	Outstanding Principle
0				35,000.00
1	1,328.97	-	-	36,328.97
2	1,379.44	-	-	37,708.41
3	1,431.81	-	-	39,140.23
4	1,486.18	5,764.80	4,278.62	34,861.61
5	1,323.72	5,764.80	4,441.08	30,420.53
6	1,155.09	5,764.80	4,609.71	25,810.82
7	980.06	5,764.80	4,784.74	21,026.08
8	798.37	5,764.80	4,966.42	16,059.66
9	609.80	5,764.80	5,155.00	10,904.65
10	414.06	5,764.80	5,350.74	5,553.91
11	210.89	5,764.80	5,553.91	-0.00