A Company Borrowed $50,000 at 12% Compounded Monthly

question 251

Multiple Choice

A company borrowed $50,000 at 12% compounded monthly. It made a payment of $15,000 after two years, and $12,000 after three years. How much is required to pay off the loan one year after the second payment?

• A) $17,432.08
• B) $42,636.06
• C) $29,799.41
• D) $48,043.38
• E) $80,611.30

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Definitions:

Monthly Interest Rate

The Monthly Interest Rate is the interest rate charged or earned per month on a loan, savings account, or investment, expressed as a percentage of the principal.

NPV

Net Present Value; a financial metric that evaluates the profitability of an investment or project by calculating the difference between the present value of cash inflows and outflows over a period of time.

Chance Of Default

The probability that a borrower will be unable to meet their obligation to repay a loan or meet contractual obligations.

Monthly Interest Rate

The interest rate expressed as a monthly percentage, reflecting the cost of borrowing money or the earnings from lending money on a monthly basis.