Peterson Plumbing has borrowed $27 850 from the Poseidon Bank at an annual rate of 8.5%. Due
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Question:
Peterson Plumbing has borrowed $27 850 from the Poseidon Bank at an annual rate of 8.5%. Due to some current cash flow problems, the business plans to repay the loan in eight equal annual installments, beginning 24 months from today. The Poseidon bank has agreed to these arrangements.
Required:
(1) What is the amount of the businesses approximate annual loan repayment (to the nearest $)?
(2) What would be the approximate change in the amount of the annual loan repayment (to the nearest $) if interest was instead charged by Poseidon Bank at 8.5% p.a. compounded half-yearly?
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-0077861629
8th edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus
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