The present value (PV) of an annuity of P equal periodic payments for n years at r% is given by:
where is the present value of an annuity factor for n years at r%.
Given that a company borrowed $40,000 cash from the bank and signed a 6-year note at 7% annual interest and that the present value of an annuity factor for 6 years at 7% is 4.7665.
Then..
Therefore, the annual annuity payments equals $8,391.90