The McDonald Group purchased a piece of equipment for $1.2 million. They paid a down payment of 20% in cash and financed the balance. The loan terms require monthly payments for 15 years at an annual percentage rate of 7.75% compounded monthly. What is the amount of each payment?

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The down payment is 20% of $1.2 million, which is $240,000. The financed amount is $960,000. Using the formula for an annuity to calculate the monthly payment on a loan, with a principal of $960,000, an annual interest rate of 7.75% (or a monthly rate of 0.646%), and 180 payments (15 years), the monthly payment is approximately $9,036.25.

The McDonald Group Purchased a Piece of Equipment for $1