Master Meter is planning on constructing a new $20 million facility. The company plans to pay 20% of the cost in cash and ﬁnance the balance. How much will each monthly loan payment be if they
Can borrow the necessary funds for 30 years at 9% compounded monthly?

Question

Quizplus · Accepted Answer

The correct answer is A. The monthly loan payment can be calculated using the formula:PMT = (PV * r) / (1 - (1 + r)^-n)where:PMT is the monthly loan paymentPV is the present value of the loan (in this case, $20 million * 0.8 = $16 million)r is the monthly interest rate (9% / 12 = 0.0075)n is the number of months (30 years * 12 months/year = 360 months)Plugging in the values, we get:PMT = (16,000,000 * 0.0075) / (1 - (1 + 0.0075)^-360)PMT = $128,740Therefore, the monthly loan payment will be $128,740.

Master Meter Is Planning on Constructing a New $20 Million