Question

In: Accounting

A Vending Machine costs P75.000 if paid in cash. On the installment plan, a purchaser should...

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

Solutions

Expert Solution

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


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