o. is considering a 5-year, P6,000,000 bank loan to finance service equipment.  The loan has an interest rate of 7.5 percent and is amortized over five years with end-of-year payments.  National Co. can also lease the equipment for an end-of-year payment of P1,500,000.  What is the difference in the actual out of pocket cash flows between the two payments?  That is, by how much does one payment exc

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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National Co. is considering a 5-year, P6,000,000 bank loan to finance service equipment.  The loan has an interest rate of 7.5 percent and is amortized over five years with end-of-year payments.  National Co. can also lease the equipment for an end-of-year payment of P1,500,000.  What is the difference in the actual out of pocket cash flows between the two payments?  That is, by how much does one payment exceed the other?

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