1 (A). An operations manager in a high tech company located in Bemidji MN is loo
ID: 1134471 • Letter: 1
Question
1 (A). An operations manager in a high tech company located in Bemidji MN is looking to buy a machine that is worth $100,000. The company decided to get a loan with a $40,000 down payment. The company agreed to pay the loan in five years. If the interest is 10% per year, calculate how much the company has to pay by year 5.
(B). Determine the present value P for the given cash flows in the table below. i = 10% per year.
(c). An operations manager’s salary is $200,000 per year. It is expected that she would get a 5% yearly raise. If the interest rate is 10% per year, determine the present worth of her salary over the next 10 years
year cash flow 0 p=? 1 100 2 200 3 300 4 400 5 500Explanation / Answer
(A)
Loan amount = Cost - Down payment = $(100,000 - 40,000) = $60,000
Annual loan repayment ($) = Loan amount / P/A(10%, 5) = 60,000 / 3.7908** = 15,827.79
Total amount repaid in 5 years = $15,827.79 x 5 = $79,138.95
**From P/A Factor table
NOTE: As per Chegg Answering policy, 1st question has been answered.
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