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7 October, 03:06

Williams Construction Inc. is building a new facility that will cost $45 million. Williams Construction will borrow $42 million from Wells Fargo bank and pay the remainder immediately as a down payment. Williams Construction will pay 8% interest but will make no payment for 4 years, at which time the entire amount will be due. How much will Williams Construction's payment be?

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  1. 7 October, 06:43
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    Williams Construction's payment would be $57.4 million

    Explanation:

    According to the given data we have the followng:

    cost of new facility=$45 million

    money borrowed=$42 million

    interest rate=8%

    Therefore, to calculate the amount of Williams Construction's payment we would have to calculate the following formula:

    amount of Williams Construction's payment=P (1+r) ∧n

    amount of Williams Construction's payment=$42 million (1+0.08) ∧4

    amount of Williams Construction's payment=$57.4 million

    Williams Construction's payment would be $57.4 million
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