If you buy a factory for R250,000 and the terms are 20 percent down, the balance to be paid off over 30 years at a 12 percent rate of interest on the unpaid balance, what are the 30 equal annual payments?

Question

Quizplus · Accepted Answer

First, we need to calculate the amount financed, which is 80% of the purchase price:
Amount financed = 0.8 x R250,000 = R200,000

Next, we need to calculate the annual payment amount using the formula:

Payment = (r x A) / (1 - (1 + r)^-n)

where:
r = the annual interest rate (as a decimal)
A = the amount financed
n = the total number of payments (in years)

Plugging in the values, we get:

Payment = (0.12 x R200,000) / (1 - (1 + 0.12)^-30) = R24,828.98

Rounding up to the nearest rand, the answer is C) R24,829.

If You Buy a Factory for R250,000 and the Terms