Question

A Japanese carmaker plans to expand its production in the United States. The company borrowed $170 million for this expansion at an interest rate of 8% per year. The loan will be repaid in equal payments at the end of each year over a 15-year period. What is the amount of the annual payment?

Answer 1

$35,951,249

Step-by-step explanation:

Future value = PV*(1+r)^n

Future value = 170,000,000 * (1+0.08)^15

Future value = 170,000,000 * (1.08)^15

Future value = 170,000,000 * 3.172

Future value = $539,268,749

The total amount to be paid in 15 years is $539,268,749

Annual payment = Future value/n

Annual payment = $539,268,749/15

Annual payment = $35,951,249