Your firm intends to finance the purchase of a new construction crane.The cost is $1,500,000.What is the size of the annual ordinary annuity payment if the loan is amortized over a ten-year period at a rate of 8.50%?
A)$228,611.56
B)$127,500.00
C)$3,391,475.16
D)There is not enough information to answer this question.

Question

Quizplus · Accepted Answer

The formula to calculate the annual ordinary annuity payment is A = (P*r)/(1-(1+r)^-n), where P is the principal amount borrowed, r is the interest rate per period, and n is the number of periods. Plugging in the values, we get A = (1,500,000*0.085)/(1-(1+0.085)^-10) = $228,611.56. Therefore, the correct choice is A.

Your Firm Intends to Finance the Purchase of a New