Question

Amazon would like to purchase a building costing $900,000 by paying $361,254 cash on the purchase date and agreeing to make equal payments every three months for the next five years. The first payment is due three months after the purchase date. Amazon's loan has an 8% interest rate. How much will Amazon pay every 3 months

Answer 1

Amazon

The amount that Amazon will pay every 3 months is:

= $15,498.63.

Step-by-step explanation:

a) Data and Calculations:

Cost of Building = $900,000

Down payment = (361,254)

Present value of payments = $538,746

Payment period = 5 years quarterly

Interest rate = 8%

Amount to be paid every 3 months from an online financial calculator:

N (# of periods) 60

I/Y (Interest per year) 8

PV (Present Value) 538746

FV (Future Value) 0

Results

PMT = $15,498.63

Sum of all periodic payments $929,917.59

Total Interest $391,171.59