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Gesky Industrial Products manufactures brushless blowers for boilers, food service equipment, kilns, and fuel cells. The company borrowed $18,000,00018,000,000 for a plant expansion and repaid the loan in seven annual payments of $3,576,4203,576,420, with the first payment made 11 year after the company received the money. What was the interest rate on the loan? Use hand and spreadsheet solutions.

Sagot :

Tundexi

Answer:

9%.

Explanation:

Note: The numbers in the question are repeated twice.

Borrowing amount = $18,000,000

Equivalent annual period = $3,576,420

Time period = 7

Interest rate of the loan formula:

A = P(A/P, i, n)

$3,576,420 = $18,000,000(A/P, i, 7)

(A/P, i, 7) = $3,576,420 / $18,000,000

(A/P, i, 7) = 0.1987

From interest table, we find the value of (A/P, i, 7) = 0.1987 at i = 9%. Thus, interest rate on the loan is 9%.

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