Math Problem Statement
A successful businessman is selling one of his fast food franchises to a close friend. He is selling the business today for $2,259,000.00. However, his friend is short on capital and would like to delay payment on the business. After negotiation, they agree to delay 5.00 years before the first payment. At that point, the friend will make quarterly payments for 17.00 years. The deal calls for a 6.36% APR “loan” rate with quarterly compounding. What quarterly payment will the friend make on the loan?
Submit Answer format: Currency: Round to: 2 decimal places.
Solution
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Math Problem Analysis
Mathematical Concepts
Present Value of an Annuity
Quarterly Compounding
Loan Amortization
Formulas
Present Value of Loan after Delay: PV_adjusted = PV / (1 + r_quarterly)^20
Quarterly Payment Formula: P = (PV_adjusted * r_quarterly) / (1 - (1 + r_quarterly)^-n)
Theorems
Annuity Formula
Compound Interest Theorem
Suitable Grade Level
University (Finance, Business Math)
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