Present and Future Value Tables of $1 at 3% Are

question 58

Multiple Choice

Present and future value tables of $1 at 3% are presented below:

-Micro Brewery borrows $300,000 to be repaid in equal installments over a period of three years. The loan payments are semiannual with the first payment due in six months, and interest is at 6%. What is the amount of each payment?

• A) $55,379.
• B) $106,059.
• C) $30,138.
• D) $60,276.

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Definitions:

Capital Structure

The combination of borrowing and ownership capital that a business employs to fund its activities and expansion.

Financial Distress

A condition where a firm finds it challenging or impossible to cover its financial commitments to lenders.

M&M Proposition II

A theory in corporate finance that suggests the cost of equity increases with higher debt levels, keeping the company's value unchanged if taxes are not considered.

Financial Risk

The hazard of suffering financial loss through an investment or business endeavor.