Compute the monthly payment for the loan

Assignment Help Econometrics

Reference no: EM13177248

Your company is considering the purchase of new earth moving equipment. The total purchase is $240,000 and we pay with $100,000 cash and borrow the rest. (12% per year nominal, compounded monthly for 5 years). The machines last for 7 years and will be worth $35,000 at the end of 7 years. The machines will save approximately $20 per ton of dirt moved. Operating costs for the equipment are $500 per month. At the end of year 3, you will have to do an overhaul and that costs $30,000. Assume that MARR is 1.5% per month and ignore the effect of taxes and depreciation.

a. Compute the monthly payment for the loan. Please be clear and specify the interest rate and the number of periods that you will use in the formulas.

b. Let X = the monthly tons of dirt moved and assume that it does not change with time. Draw the cash flow diagram for this project as a function of X. Assume that "up" arrows are savings or revenue and down arrows are expenses. If you cannot do part a, then assume that the monthly loan payment is $500.

c. Set up the equation and solve for the breakeven monthly tons of dirt moved to justify the purchase of the new machines.

Reference no: EM13177248

Questions Cloud

Find where demand and supply curves intersect : 1. The three fundamental economic questions of what, how, and for whom: a-exist because of scarcity. b-are much more serious in a socialist system. c-are not serious in a capitalistic system. d-are not relevant in the industrialized world of today.

State a species of cactus varies in the density of spines : A species of cactus varies in the density of spines on the plants (a genetically based trait).Plants with fewer spines are more likely to be eaten by peccaries.However, the plants with the most spines are preferred by an insect who lays its eggs o..

What is mass of o2 released : If there was 0.5011g of KClO3 in the original mixture, what is the true percent of KClO3?

What must be the pressure of the n2(g) : An application calls for N2(g) with a density of 1.80g/L at 32 degrees. What must be the pressure (atm) of the N2(g)?

Compute the monthly payment for the loan : Let X = the monthly tons of dirt moved and assume that it does not change with time. Draw the cash flow diagram for this project as a function of X. Assume that "up" arrows are savings or revenue and down arrows are expenses. If you cannot do part..

Propose a possible identity for the metal m : An "A" group metal (M) reacts with chlorine and oxygen to form ionic compounds with the formulas MCl4 and MO2. Propose a possible identity for the metal M. Explain your reasoning.

Explain what is the frequency of the wildtype allele : You have a population of fruitflies that is in Hardy-Weinberg equilibrium. 25% of the population have black bodies (recessive), while 75% are wildtype (dominant). What is the frequency of the wildtype allele (p)?

What is the percent yield : How much aspirin can be made from 100.0 g of salicylic acid and 100 g of acetic anhydride? If 122 g of aspirin were obtained by the reaction, what is the percent yield?

Calculate the frequency and energy of the least energitic : oxygen molecules absorb uv radiation of wavelength less than and equal to 242 nm calculate the frequency and energy of the least energitic of these photons.

User Account

All Pages