Question

Fusion has already been demonstrated as an energy source, albeit on a limited scale. Engineers hope to transform the scale to provide energy at commercial levels. A loan for development of a niche application has been taken out by an engineering research firm, borrowing $900,000. The loan will be paid back over 5 years with uniform quarterly payments and an interest rate of 10 percent compounded quarterly.

What is the equal quarterly amount to be paid?

Answer 1

$37,332.77

Step-by-step explanation:

The computation of the equal quarterly amount that need to be paid is shown below:

= $900,000 × 2.5% ÷ (1 - 2.5%)^20

= $900,000 × 0.041480855

= $37,332.77

The rate of interest is

= 10% ÷ 4

= 2.5%

And, the time period is

= 5 × 4

= 20 years