Problems 137 3.74 Consider Gizmo, a small manufacturing company whose management wishes to reduce overhead by installing a new, energy-efficient heating system. The new system costs $100,000. Due to the company's insufficient cash reserves the management has decided that borrowing money is the only way to finance the desired improvement. A problem arises when Gizmo's accountant points out that a standard direct reduction loan would severely strain the firm's cash flow during the heating season. In order to overcome this difficulty, the accountant suggests a periodic linear gradient series repayment scheme with the gradient G-$75 in a skip payment loan. The accountant proposed the following repayment schedule Length of Loan: Four Years Month Jan-Aug Sep-Apr May-Sep Oct-Mar Apr-Oct Nov-Feb Mar-Dec Repay Yes Skip Yes Skip Yes Skip Yes The lender has quoted an APR of 12%. Determine the repayment schedule over four years. (Source: R.A. Formato, "Generalized Formula for the Periodic Payment in a Skip Payment Loan with Arbitrary Skips," The Engineering Economist, 37(4), Summer 1992.)