Question

Cooley Landscaping Company needs to borrow ​$21 comma 000for a new​ front-end dirt loader. The bank is willing to loan the funds at 9.5​%interest with annual payments at the end of the year for the next 7years. What is the annual payment on this loan for Cooley​ Landscaping?

Answer 1

$ 4242.76

Step-by-step explanation:

Annual payment = rP / (1 - ( 1 + r)^-n)

r = rate = 9.5%

P = the amount borrowed = $ 21000

n = number of years

Annual payment = 0.095 ($ 21 000) / ( 1 - (1 + 0.095)⁻⁷ ) = $ 4242.76