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You plan to finance a $100,000 plant expansion over 5 years at a 12% annual interest rate

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Final answer:

To finance a $100,000 plant expansion over 5 years at a 12% annual interest rate, the future value (amount to be financed) is approximately $338,635.42.

Step-by-step explanation:

To finance a $100,000 plant expansion over 5 years at a 12% annual interest rate, you can use the formula for the future value of an ordinary annuity:

FV = P * ((1 + r)n - 1) / r

Where:

  • FV is the future value (amount to be financed)
  • P is the periodic payment (annual payment)
  • r is the interest rate per period (12% per year, so 0.12/12 = 0.01 per month)
  • n is the number of periods (5 years, so 5*12 = 60 months)

Plugging in the values, we get:

FV = $100,000 * ((1 + 0.01)60 - 1) / 0.01

Simplifying the equation, we find that the future value (amount to be financed) is approximately $338,635.42.

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