1.18 Bodine Electric, based in Des Moines, Iowa, USA, makes gear motors with a three-stage, selectively-hardened gearing cluster that is permanently lubricated. If the company borrows $20 million for a new distribution facility in Europe, how much must it pay back each year to repay the loan in six equal annual payments at an interest rate of 10% per year?
1.18 Bodine Electric, based in Des Moines, Iowa, USA, makes gear motors with a three-stage, selectively-hardened gearing cluster that is permanently lubricated. If the company borrows $20 million for a new distribution facility in Europe, how much must it pay back each year to repay the loan in six equal annual payments at an interest rate of 10% per year?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question #1.18
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Determine the amount of money
FrostBank might loan a housing
developer who will repay the loan 2
years from now by selling eight water-
view lots at $240,000 each. Assume the
bank's interest rate is 10% per year.
Bodine Electric, based in Des Moines,
Iowa, USA, makes gear motors with a
three-stage, selectively-hardened gearing
cluster that is permanently lubricated. If
the company borrows $20 million for a
new distribution facility in Europe, how
much must it pay back each year to
repay the loan in six equal annual
payments at an interest rate of 10% per
year?
Dubai Works manufactures angular
contact ball bearings for pumps that
operate in harsh environments. The
company invested $2.4 million in a
process that resulted in net profits of
$760,000 per year for five consecutive
years. What rate of return did the
eader-ui.prod.mheducation.com C
Expert Solution
Step 1 Introduction
Time Value of Money :— According to this concept, value of money in present day is greater than the value of same sum of money in future date.
Present value :— It is the value of future cash flows in present day.
Present value = Future value/(1+i)n
Where, i = Periodic interest rate
n = Number of period
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