The Gulf Tourism Company purchased a building for its offices at the end of the year, at a value…

The Gulf Tourism Company purchased a building for its offices at the end of the year, at a value of 85,000 riyals, and paid 24 percent of the value as a down payment, provided that the remaining amount is paid in fifteen equal annual payments, including the principal and 10 percent compound interest on the remaining balance.

demanded.

. 1 What is the amount of the annual payment that the company must pay when the required interest rate is 5%, 20%, 15%, 10% or 25%? Compare the annual payment for each interest rate and select the best rate to reduce financing costs, giving reasons.

2 What is the amount required to be paid at the end of the period if the company decides to pay the remaining amount on:

a. 5 payments with 25% interest

B. 15 Payment with 10% interest

C 10 payments with 5% interest

d 8 payments with 20% interest

e. 12 payments with 12% interest

Compare the amounts to be paid at the end of the period and select the least costly financing decision for the company.