If you buy a factory for $250,000 and the terms are 20% down,the balance to be paid off over 30 years at a 12 percent rate of interest on the unpaid balance,what are the 30 equal annual payments? (Round to the nearest whole dollar)
A) $20,593
B) $31,036
C) $24,829
D) $50,212
E) $6,667

Question

Quizplus · Accepted Answer

Step 1 - Account for the down payment.
$250,000 × 20% = $50,000
$250,000 - 50,000 = $200,000 to be financed
Step 2 - Calculate the amount of each payment.
PV = PMT × 11ea7fdb_fc18_7d8e_a768_2d3afb8854f9_TB2902_11 PMT = PV / 11ea7fdb_fc18_a49f_a768_793c448dfe90_TB2902_11 PMT = 200,000 / 11ea7fdb_fc18_a4a0_a768_6da9c92c8fa6_TB2902_11 = $24,828.73
Using a financial calculator:
N = 30, I/Y = 12, PV = -200,000, FV = 0, cpt PMT = $24,828.73

If You Buy a Factory for $250,000 and the Terms