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28 August, 22:34

Present value with periodic rates. Sam Hinds, a local dentist, is going to remodel the dental reception area and add two new workstations. He has contacted A-Dec, and the new equipment and cabinetry will cost $25 comma 000. The purchase will be financed with an interest rate of 7.5 % loan over 7 years. What will Sam have to pay for this equipment if the loan calls for quarterly payments (4 per year) and monthly payments (12 per year) ? Compare the annual cash outflows of the two payments. Why does the monthly payment plan have less total cash outflow each year?

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  1. 29 August, 02:13
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    Why does the monthly payment plan have less total cash outflow each year?

    Total paym. capital Interest

    Q. Totales payments 32.362,50 25.000,00 7.362,50

    AnnulaTotales payments 33.040,06 25.000,00 8.040,06

    Compare the annual cash outflows of the two payments.

    Total paym. capital Interest

    Year 1 Quarterly 4.623,21 2.826,48 1.796,74

    Year 1 Annual 4.720,01 2.845,01 1.875,00

    Year 2 Quarterly 4.623,21 3.044,50 1.578,71

    Year 2 Annual 4.720,01 3.058,38 1.661,62

    Year 3 Quarterly 4.623,21 3.279,34 1.343,87

    Year 3 Annual 4.720,01 3.287,76 1.432,25

    Year 4 Quarterly 4.623,21 3.532,30 1.090,92

    Year 4 Annual 4.720,01 3.534,34 1.185,66

    Year 5 Quarterly 4.623,21 3.804,76 818,45

    Year 5 Annual 4.720,01 3.799,42 920,59

    Year 6 Quarterly 4.623,21 4.098,25 524,97

    Year 6 Annual 4.720,01 4.084,38 635,63

    Year 7 Quarterly 4.623,21 4.414,37 208,85

    Year 7 Annual 4.720,01 4.390,71 329,30

    Explanation:

    Period Payment Capital Interest

    1 1.155,80 687,05 468,75

    2 1.155,80 699,94 455,87

    3 1.155,80 713,06 442,74

    4 1.155,80 726,43 429,37

    5 1.155,80 740,05 415,75

    6 1.155,80 753,93 401,88

    7 1.155,80 768,06 387,74

    8 1.155,80 782,46 373,34

    9 1.155,80 797,13 358,67

    10 1.155,80 812,08 343,72

    11 1.155,80 827,31 328,50

    12 1.155,80 842,82 312,98

    13 1.155,80 858,62 297,18

    14 1.155,80 874,72 281,08

    15 1.155,80 891,12 264,68

    16 1.155,80 907,83 247,97

    17 1.155,80 924,85 230,95

    18 1.155,80 942,19 213,61

    19 1.155,80 959,86 195,94

    20 1.155,80 977,86 177,95

    21 1.155,80 996,19 159,61

    22 1.155,80 1.014,87 140,93

    23 1.155,80 1.033,90 121,90

    24 1.155,80 1.053,29 102,52

    25 1.155,80 1.073,03 82,77

    26 1.155,80 1.093,15 62,65

    27 1.155,80 1.113,65 42,15

    28 1.155,80 1.134,53 21,27

    Totales payments 32.362,50 25.000,00 7.362,50

    Period Payment Capital Interest

    1 4.720,01 2.845,01 1.875,00

    2 4.720,01 3.058,38 1.661,62

    3 4.720,01 3.287,76 1.432,25

    4 4.720,01 3.534,34 1.185,66

    5 4.720,01 3.799,42 920,59

    6 4.720,01 4.084,38 635,63

    7 4.720,01 4.390,71 329,30

    Totales payments 33.040,06 25.000,00 8.040,06
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