Solve the Problem

question 4

Multiple Choice

Solve the problem. Use an annual percentage rate table if necessary.
-A farmer buys a new harvester for $70,000. He makes a down payment of $21,000 and finances the Balance at 7.0% APR over 60 months. Before making the 24th payment, the farmer decides to pay The remaining balance on the loan. What is the total amount due to pay off the balance (use the Actuarial method) ?

• A) $31,423.30
• B) $44,890.43
• C) $31,798.87
• D) $32,393.58

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Definitions:

Bond Issues

The process of offering bonds to investors, which are debt securities constituting a loan to the issuer from the bondholder.

Cost of Debt

The effective rate that a company pays on its current debt, which can include bonds, loans, and other forms of debt, influencing its capital structure decisions.

Cost of Capital

The rate of return that a company must achieve in order to justify the cost of an investment, often influencing investment decisions.

Beta

A unit of measurement for the swings, or integral risk, experienced by a security or portfolio in relation to the wider market.