Explore BrainMass

Explore BrainMass

    Business Math : Payments, Installments and Compond Interest

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    A company can borrow $100,000 at 10% compounded annually for 10 years. To repay the debt at the end of 10 years, a sinking fund is to be set up at 9% compounded annually. Another lender will provide the money at 9 1/2% compounded annually and permit the loan to be amortized by 10 equal annual payments. Which plan would you choose for the company?

    © BrainMass Inc. brainmass.com December 24, 2021, 4:56 pm ad1c9bdddf

    Solution Preview

    In first method of repayment,
    r = 10 %
    n =10 yrs

    the total amount paid after 10 yrs:
    A1 = 100000*(1 + 10/100)^10 = $259374.25

    2nd mode:
    r = 9.5%
    each installment ...

    Solution Summary

    This solution provides a detailed, step by step explanation of the given question.