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Wesley Excavations has taken on a loan to buy a new bulldozer. The terms of the...

Wesley Excavations has taken on a loan to buy a new bulldozer. The terms of the loan state that they must pay $53,209 per year for the next 20 years. If Wesley's cost of debt is 0.103, how much does the bulldozer cost? You may ignore taxes.

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Expert Solution

Present value of annuity=Annuity[1-(1+interest rate)^-time period]/rate

=53,209[1-(1.103)^-20]/0.103

=53,209*8.3421029

=$443874.95(Approx)

jeff jeffy answered 2 years ago
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