Annual finance cost per year over the ten year life of van

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Reference no: EM131950392

The 501st is exploring the possibility of purchasing a van to transport their Stormtroopers and other members to gigs outside of the Memphis area to such events as Weird Al concerts. The agreed cost of the van that they have decided to purchase is $32,000 which includes a rear lift to get Brodie in and out of the van. Mr. Dan Dan has offered financing at an interest rate of 6% per year over a total of four years. The financing arrangement requires a down payment now of 20% of the initial cost. Compute the cost per year to finance the van over the four year loan. The 501st believes that they will keep the van for a total of eight years. They plan 2 to sell the van for $4,500 after eight years of use. If the 501st uses a Minimum Attractive Rate of Return (MARR) of 5% per year, what is the annual finance cost per year over the ten year life of the van? Include a cash flow diagram with your solution.

Reference no: EM131950392

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