5. A bank gives a loan to a company to purchase an equipment worth P1,000,000 at an interest rate of 18% compounded annually. This amount should be repaid in 15 yearly equal installments. Find the installment amount that the company has to pay to the bank.
5. A bank gives a loan to a company to purchase an equipment worth P1,000,000 at an interest rate of 18% compounded annually. This amount should be repaid in 15 yearly equal installments. Find the installment amount that the company has to pay to the bank.
Chapter19: Lease And Intermediate-term Financing
Section: Chapter Questions
Problem 19P
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Question
![5. A bank gives a loan to a company to purchase an equipment worth P1,000,000 at an
interest rate of 18% compounded annually. This amount should be repaid in 15 yearly
equal installments. Find the installment amount that the company has to pay to the bank.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5ae7938f-6f37-4e15-8bd0-250e7c28dc0f%2F1f524596-dcce-4bb7-83bd-5b28aa681f8e%2Fn24tj9n_processed.png&w=3840&q=75)
Transcribed Image Text:5. A bank gives a loan to a company to purchase an equipment worth P1,000,000 at an
interest rate of 18% compounded annually. This amount should be repaid in 15 yearly
equal installments. Find the installment amount that the company has to pay to the bank.
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
Step 1
Formula for calculating the installment amount is:
EMI formula = [P*r*(1+r)^n]/[(1+r)^n - 1]
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