5 . Present value with periodic rates . Let ’ s follow up with Sam Hinds , the dentist , and his remodeling project ( Chapter 4 , Problem 12 ). The cost of the equipment for the project is $ 18,000 , and he will finance the purchase with a 7.5 % loan over six years . Originally , the loan called for annual payments . Redo the payments based on quarterly payments ( four per year ) and monthly payments ( twelve per year ). Compare the annual cash outflows of the two payments . Why does the monthly payment plan have less total cash outflow each year ?
Original Problem from Chapter 4 , Problem 12 to go with Chapter 5 Problem 5 :
12 . Payments . Sam Hinds , a local dentist , is going to remodel the dental reception area and add two new workstations . He has contacted A-Dec , and the new equipment and cabinetry will cost $ 18,000 . A-Dec will finance the equipment purchase at 7.5 % over a six-year period . What will Hinds have to pay in annual payments for this equipment ?
Chapter 5 : Problem 7
7 . Future value with periodic rates . Matt Johnson delivers newspapers and is putting away $ 15.00 every month from his paper route collections . Matt is eight years old and will use the money when he goes to college in ten years . What will be the value of Matt ’ s account in ten years with his monthly payments if he is earning 6 % ( APR ), 8 % ( APR ), or 12 % ( APR )?
Chapter 5 : Advanced Problem 1a & 1b
1 . Monthly amortization schedule . Sherry and Sam want to purchase a condo at the coast . They will spend $ 650,000 on the condo and are