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Pocket cash flows between the two payments

Problem:

Stanley Corporation is considering a 5-year, $6,000,000 bank loan to finance service equipment. The loan has an interest rate of 10 percent and is amortized over five years with end-of-year payments. Stanley can also lease the equipment for an end-of-year payment of $1,750,000. What is the difference in the actual out of pocket cash flows between the two payments? That is, by how much does one payment exceed the other?

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Finance Basics: Pocket cash flows between the two payments

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