Present value with periodic rates. 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 $25 comma 000. the purchase will be financed with an interest rate of 7.5% loan over 7 years. what will sam have to pay for this equipment if the loan calls for quarterly payments (4 per year) and monthly payments (12 per year)? compare the annual cash outflows of the two payments. why does the monthly payment plan have less total cash outflow each year?

Why does the monthly payment plan have less total cash outflow each year?

                                               Total paym.   capital              Interest

Q.         Totales payments32.362,5025.000,007.362,50

AnnulaTotales payments33.040,0625.000,008.040,06

Compare the annual cash outflows of the two payments.

                           Total paym.   capital   Interest

Year 1 Quarterly4.623,212.826,481.796,74

Year 1 Annual         4.720,012.845,011.875,00

Year 2 Quarterly4.623,213.044,501.578,71

Year 2 Annual4.720,013.058,381.661,62

Year 3 Quarterly4.623,213.279,341.343,87

Year 3 Annual4.720,013.287,761.432,25

Year 4 Quarterly4.623,213.532,301.090,92

Year 4 Annual4.720,013.534,341.185,66

Year 5 Quarterly4.623,213.804,76818,45

Year 5 Annual4.720,013.799,42920,59

Year 6 Quarterly4.623,214.098,25524,97

Year 6 Annual4.720,014.084,38635,63

Year 7 Quarterly4.623,214.414,37208,85

Year 7 Annual4.720,014.390,71329,30

Explanation:

PeriodPaymentCapitalInterest

11.155,80687,05468,75

21.155,80699,94455,87

31.155,80713,06442,74

41.155,80726,43429,37

51.155,80740,05415,75

61.155,80753,93401,88

71.155,80768,06387,74

81.155,80782,46373,34

91.155,80797,13358,67

101.155,80812,08343,72

111.155,80827,31328,50

121.155,80842,82312,98

131.155,80858,62297,18

141.155,80874,72281,08

151.155,80891,12264,68

161.155,80907,83247,97

171.155,80924,85230,95

181.155,80942,19213,61

191.155,80959,86195,94

201.155,80977,86177,95

211.155,80996,19159,61

221.155,801.014,87140,93

231.155,801.033,90121,90

241.155,801.053,29102,52

251.155,801.073,0382,77

261.155,801.093,1562,65

271.155,801.113,6542,15

281.155,801.134,5321,27

Totales payments32.362,5025.000,007.362,50

PeriodPaymentCapitalInterest

14.720,012.845,011.875,00

24.720,013.058,381.661,62

34.720,013.287,761.432,25

44.720,013.534,341.185,66

54.720,013.799,42920,59

64.720,014.084,38635,63

74.720,014.390,71329,30

Totales payments33.040,0625.000,008.040,06

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