Answer to Question #74226 in Microeconomics for zulfiqar

Question

Shashank Construction Company borrows the entire cost of a new trailor truck. The loan has an annual interest rate of 12 percent and calls for monthly payments of $10,000 over a five-year period. What is the cost of the truck ?

Answer 1

We use financial functions of Excel:
For example: PV (12%/12; 5*12; -10,000) = $449 550.38,
Where 12% is annual interest rate, 12%/12 is monthly interest rate, 5*12 is number of months, 10,000 monthly payment.
So, cost of the truck is $449 550.38