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Purchased Lab Equipment (7 year tax life) from "Photonics" - Photonics offered me a zero interest loan for $20,000 (total). The note is due in 5...

. Purchased Lab Equipment (7 year tax life) from “Photonics” –
Photonics offered me a zero interest loan for $20,000 (total).
The note is due in 5 years. We must make monthly payments beginning today. A similar situation would bear an 8% compounding interest. No S.V.
** Remember, you must figure the actual cost of the Lab Equipment**
You will need to use a Financial Calc. which can be found online. This is an annuity due type loan. (payments made day one)

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Dear Student, Please check the attached solutions of... View the full answer

CH030510_502087_ACC.doc

A = 20,000
Rate = 8% p.a.
N = 5 yrs.
Calculate (P) = actual cost of lab equipment.
A = P(1+0.08) = 20,000
P = 20,000/1.08 = 18,518
Hence the cost is $18,518.
Interest = 20,000 – 18,518 = $1482....

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