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23 March, 09:41

Bodine Electric, based in Des Moines, Iowa, USA, makes gear motors with a three-stage, selectivelyhardened gearing cluster that is permanently lubricated. If the company borrows $20 million for a new distribution facility in Europe, how much must it pay back each year to repay the loan in six equal annual payments at an interest rate of 10% per year?

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  1. 23 March, 10:54
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    The amount that is to be paid per year by the company is $3,66,666.66 to repay the loan.

    Explanation:

    Loan that is taken by a business organisation or by a company from some other party or from a bank may be to meet the requirements to keep the company or the organisation in the running and keep the working going on.

    The loan that is to be paid by the Bodine electric is to be paid in six installments, so each year some amount is to be paid by the company to repay it's loan in equal amounts. Since there is interest also to be applied on the principal amount, then that is also to be added to the principal amount while paying each year.
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