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Interest and principal components

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John runs a printing company and he needs to buy a machine that costs $75,000. He can take a 7 year loan from bank that has a 7.2% per annum interest compounded quarterly, and requires equal quarterly repayments, commencing 3 months after the loan is drawn, with each payment consisting of interest and principal components.

  1. Calculate what would be Edward's quarterly repayment.
  2. If Edward wants to pay $3,867 a quarter instead, how long will it take him to pay off the loan?

Reference no: EM133115793

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