A company must repay the bank a single payment of $21,000 cash in 3 years for...
A company must repay the bank a single payment of $21,000 cash in 3 years for a loan it entered into. The loan is at 10% interest compounded annually. The present value of 1 (single sum) at 10% for 3 years is .7513. The present value of an annuity (series of payments) at 10% for 3 years is 2.4869. The present value of the loan (rounded) is:
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$15,777.
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$21,000.
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$23,707.
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$8,444.
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$52,225.
Homework Answers
Present value factor at 10% for 3rd year is 0.7513
Amount to be paid at the end of 3rd year $21,000
Present value = $21,000 X 0.7513 = $15,777
1st option.
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A company must repay the bank a single payment of $21,000 cash
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