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7 August, 02:12

A company borrowed $40,000 cash from the bank and signed a 6-year note at 7% annual interest. The present value of an annuity factor for 6 years at 7% is 4.7665. The present value of a single sum factor for 6 years at 7% is 0.6663. The annual annuity payments equal:

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  1. 7 August, 02:34
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    The present value (PV) of an annuity of P equal periodic payments for n years at r% is given by:

    where is the present value of an annuity factor for n years at r%.

    Given that a company borrowed $40,000 cash from the bank and signed a 6-year note at 7% annual interest and that the present value of an annuity factor for 6 years at 7% is 4.7665.

    Then ...

    Therefore, the annual annuity payments equals $8,391.90
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