Question

A company borrows $25 000 to buy new equipment. The loan is to be repaid in five equal annual payments. If the interest rate is10%, how much are each of the payments? " $3 238 $6 595 $5 500 $6 222

Answer 1

Each payment is of $6595

Step-by-step explanation:

Amount borrowed by company= $25000

No. of installments = 5

Interest rate = 10%

We are supposed to find how much are each of the payments

Formula :
`Amount =I ((1-(1)/((1+r)^n))/(r))`

I = installment

r = rate of interest

n = No. of installments

So,
`25000 =I ((1-(1)/((1+0.1)^5))/(0.1))\\(25000)/(((1-(1)/((1+0.1)^5))/(0.1)))=I\\6594.93=I`

So, Each payment is of $6595