A company buys a machine for $17,000, which it agrees to pay for in six equal...

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A company buys a machine for $17,000, which it agrees to pay for in six equal annual payments, beginning one year after the date of purchase, at an annual interest rate of 6.5%. Immediately after the second payment, the terms of the agreement are changed to allow the balance due to be paid off in a single payment the next year. What is the final single payment? Solution: 1. Draw the CFD by yourself; 2. First, calculate annual payment amount for the first 2 years: A= 6.5%, + )=17000X = $ The final payment is the worth of the unpaid payments. 3. Second, Calculate the single payment amount due at the end of the 3rd year: F=$ A company buys a machine for $17,000, which it agrees to pay for in six equal annual payments, beginning one year after the date of purchase, at an annual interest rate of 6.5%. Immediately after the second payment, the terms of the agreement are changed to allow the balance due to be paid off in a single payment the next year. What is the final single payment? Solution: 1. Draw the CFD by yourself; 2. First, calculate annual payment amount for the first 2 years: A= 6.5%, + )=17000X = $ The final payment is the worth of the unpaid payments. 3. Second, Calculate the single payment amount due at the end of the 3rd year: F=$

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To solve this problem lets break it down into steps Step 1 Calculate the annual payment amount fo... View the full answer