Question

TB MC Qu. 10-90 A company purchased equipment... A company purchased equipment and signed a 7-year installment loan at 9% annual interest. The annual payments equal $9,000. The present value for an annuity (series of payments) at 9% for 7 years is 5.0330. The present value of 1 (single sum) for 7 years at 9% is 0.5470. The present value of the loan is:

Answer 1

$45,296.58

Step-by-step explanation:

Present value is the sum of discounted cash flows

present value can be calculated usiing a finaical calculator

cash flow each year from year 1 to 7 = $9,000.

i = 9%

present value = $45,296.58

To find the PV using a financial calculator:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.

3. Press compute