Question: A firm borrows $ 2 5 , 0 0 0 from the bank at a 1 2 % annual interest rate to purchase some new

A firm borrows $25,000 from the bank at a 12% annual interest rate to
purchase some new machinery. This loan is to be repaid in equal
installments at the end of each year over the next 5 years.
1. If the present value factor is 3.605, what is the annual loan payment
made by the firm?
2. What is the interest payment made by the firm during the first year of the
loan?
3. What is the principal repayment made by the firm during the first year of
the loan?
4. What is the loan balance at the end of the first year of the loan?
5. What is the interest payment made by the firm during the second year of
the loan?
6. What is the principal repayment made by the firm during the second year
of the loan?
7. What is the loan balance at the end of the second year of the loan?

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