Environmental recovery company RexChem Partners plans to finance a site reclamation project that will require a 4-year cleanup period. If the company borrows $4.1 million now, how much will the company have to get at the end of each year in order to earn 15% per year, compounded quarterly on its investment? Additionally, what is the spreadsheet function?
What will be an ideal response?
PP = year; CP = quarter; effective per PP needed
i = (1 + 0.15/4)4 – 1 * 100
= 15.865% per year
A = 4,100,000(A/P,15.865%,4)
Find factor value by interpolation, formula, or spreadsheet.
By formula: A = 4,100,000(0.35641) = $1,461,281 per year
By spreadsheet function: = PMT(15.865%,4,4100000)
A = $1,461,291 per year
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