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25 January, 23:19

A company purchased equipment and signed a 5-year installment loan at 10% annual interest. The annual payments equal $11,600. The present value of an annuity factor for 5 years at 10% is 3.7908. The present value of a single sum factor for 5 years at 10% is. 6209. The present value of the loan is:

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  1. 25 January, 23:35
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    The present value of the loan is $43,973.98

    Explanation:

    In order to calculate the present value of the loan we would have to make the following calculation:

    Present value of the loan=annual payments*present value of an annuity factor for 5 years at 10%

    annual payments=$11,600

    present value of an annuity factor for 5 years at 10%=3.7908

    Therefore, Present value of the loan=$11,600*3.7908

    Present value of the loan=$43,973.98

    The present value of the loan is $43,973.98
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