Your firm intends to finance the purchase of a new construction crane.The cost is $2,500,000.How large is the payment at the end of year ten if the crane is financed at a rate of 7.50% as a discount loan?
A)$5,152,578.91
B)$4,158,364.87
C)$3,391,475.16
D)There is not enough information to answer this question.

Question

Quizplus · Accepted Answer

The payment at the end of year ten can be calculated using the formula for the future value of a lump sum: FV = PV(1 + r)^n. Here, PV = $2,500,000, r = 7.50% or 0.075, and n = 10 years. Plugging these values into the formula gives FV = $2,500,000 * (1 + 0.075)^10 = $5,152,578.91.

Your Firm Intends to Finance the Purchase of a New