A company borrows $100,000 by signing a $100,000, 5% note that requires four equal payments of

(round to the nearest dollar) at the end of each year. (The present value of an annuity of four annual payments, discounted at 5% equals 3.5460.)

Question

Annalise Hart

Mathematics

11 October, 11:02

A company borrows $100,000 by signing a $100,000, 5% note that requires four equal payments of

(round to the nearest dollar) at the end of each year. (The present value of an annuity of four annual payments, discounted at 5% equals 3.5460.)

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Answers (1)

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Brenton Hobbs · Answer 1

The annual repayment is what the question required, which is $ 28,200.79

Step-by-step explanation:

The amount the company at year end would include the original amount of principal which is $25,000 ($100,000/4 years), as well as the interest payable at 5% cost of borrowing.

The actual repayment requires at each year end is the original loan of $100,000 divided by the present value of four annual payments discounted at 5% which is 3.5460

Annual repayment=$100,000/3.5460=$28,200.79

Interest yearly=$28,200.79-$25,000.00=$3,200.79

A company borrows $100,000 by signing a $100,000, 5% note that requires four equal payments of(round to the nearest dollar) at the end of each year. (The present value of an annuity of four annual payments, discounted at 5% equals 3.5460.)

A company borrows $100,000 by signing a $100,000, 5% note that requires four equal payments of

(round to the nearest dollar) at the end of each year. (The present value of an annuity of four annual payments, discounted at 5% equals 3.5460.)