Question: Company plans to purchase a new equipment to improve its productivity for next 3 years. Consulting with the industry economics, the management belives that the most cost effective way to procuring this equipment is relying on loan for $500,000 from bank with monthly payment. The agreement is on 36 monthly payments at 12% annual interest rate for this purchasing.
1. What is the monthly payment and what is the final total cost to this company?
2. What is the miminum monthly production rate to offset the monthly payment if the unit sale is $50 per unit? Ignore the production cost. Use excel formula method.