Your Company Is Planning to Borrow $1,000,000 on a 5-Year,15

question 76

Multiple Choice

Your company is planning to borrow $1,000,000 on a 5-year,15 percent,annual payment,fully amortized term loan.What fraction of the payment made at the end of the second year will represent repayment of principal?

• A) 29.83%
• B) 57.18%
• C) 35.02%
• D) 64.45%
• E) 72.36%

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Definitions:

Negligence

A failure to act with the care that a reasonably prudent person would exercise under the same circumstances, often leading to liability for resulting damages.

Privity of Contract

The principle that a contract confers rights and imposes liabilities only on its parties; no outsider can gain rights or be liable under it.

Novation

The process of replacing an existing obligation with a new one, substituting a party or terms in a contract with the consent of all parties involved.

Rules of Interpretation

Guidelines and principles used to determine the meaning and intention of legal texts and statutory provisions.