A company purchased equipment and signed a 7-year installment loan at 9% annual interest. The annual payments equal $9,000. The present value for an annuity (series of payments) at 9% for 7 years is 5.0330. The present value of 1 (single sum) for 7 years at 9% is 0.5470. The present value of the loan is:

present value of the loan = 45,297

Step-by-step explanation:

given data

annual interest = 9 %

time = 7 year

annual payments = $9,000

present value factor for annuity = 5.0330

solution

we get here present value of the loan that is express as

present value of the loan = present value factor * annual payments ... 1

put here value we get

present value of the loan = $9,000 * 5.0330

present value of the loan = 45,297