Suppose a Construction Project Anticipates End-Of-Month Draws of $400,000, $300,000

question 6

Multiple Choice

Suppose a construction project anticipates end-of-month draws of $400,000, $300,000, and $600,000 consecutively. What will be the balance owed at the end of the third month if the interest on the loan is 7% per annum compounded monthly) , and no payments of either principal or interest are required during the construction period?

• A) $1,306,430.
• B) $1,314,051.
• C) $1,378,960.
• D) Cannot be computed with the information given.

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Definitions:

Interest

Interest is the cost of borrowing money, typically expressed as a percent of the amount borrowed, paid by the borrower to the lender.

Interest Rate

The percentage of a loan charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.

Expected Rate

The anticipated return or yield on an investment, often based on historical data or forecasts of future trends.

Total Investment

The overall amount of money invested in assets, projects, or securities by an individual or entity.