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Kramer Manufacturing would like to purchase a warehouse for $450,000. How much will the monthly payment be if Kramer can finance the warehouse for 10 years at a 4% annual interest rate?

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Blitztiger
The present value is $450,000, and we have 4% annual interest over 10 years. Since we are looking at monthly payments, we further divide the 10 years into 120 months. The monthly interest is calculated as:
(1.04) = (1+i)^12
i = 0.003274
Then using the formula for periodic payments:
PP = PV*i*(1+i)^n / [(1+i)^n - 1]
PP = (450,000)*0.03274*(1.03274)^120 / (1.03274^120 - 1)
PP = $4540.75
Therefore, the monthly payment is $4,540.75.
ayokenny2001

The monthly payment for Kramer will be $4,540.75

What is periodic payment?

Periodic payment refers to an investment plan where an individual makes save little payments over time in order to invest them.

We know that the present value is $450,000 and we have 4% annual interest over 10 years.

Since we are looking at monthly payments, we will divide the 10 years into 120 months.

The monthly interest is calculated as:

(1.04) = (1+i)^12

i = 0.003274

Then using the formula for periodic payments:

PP = PV*i*(1+i)^n / [(1+i)^n - 1]

PP = (450,000)*0.03274*(1.03274)^120 / (1.03274^120 - 1)

PP = $4540.75

Hence, the monthly payment is $4,540.75

Learn more about periodic payment here: https://brainly.com/question/16970802

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