Problem 1 The management of Campaign for Peace in Nepal Limited decided to buy a printing press by taking a loan of Rs 1,500,000 for 4 years from Peace Cooperative Limited. The loan bears a compound annual interest rate of 12 percent and calls for equal annual installment payments at the end of each year for 4 years. a.What is the amount of annual payments? b.Prepare a schedule showing the fraction of interest and principal payment for each year. c.What fraction of payment made in year 2 represents the principal? d.What fraction of payment made in year 4 represents the interest?
Problem 1 The management of Campaign for Peace in Nepal Limited decided to buy a printing press by taking a loan of Rs 1,500,000 for 4 years from Peace Cooperative Limited. The loan bears a compound annual interest rate of 12 percent and calls for equal annual installment payments at the end of each year for 4 years. a.What is the amount of annual payments? b.Prepare a schedule showing the fraction of interest and principal payment for each year. c.What fraction of payment made in year 2 represents the principal? d.What fraction of payment made in year 4 represents the interest?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Problem 1
The management of Campaign for Peace in Nepal Limited decided to buy a printing press by taking a loan of Rs 1,500,000 for 4 years from Peace Cooperative Limited. The loan bears a compound annual interest rate of 12 percent and calls for equal annual installment payments at the end of each year for 4 years.
a.What is the amount of annual payments?
b.Prepare a schedule showing the fraction of interest and principal payment for each year.
c.What fraction of payment made in year 2 represents the principal?
d.What fraction of payment made in year 4 represents the interest?
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