A Bank Is Negotiating a Loan

question 65

Multiple Choice

A bank is negotiating a loan.The loan can either be paid off as a lump sum of $100,000 at the end of five years,or as equal annual payments at the end of each of the next five years.If the interest rate on the loan is 10%,what annual payments should be made so that both forms of payment are equivalent?

• A)$12,000
• B)$16,380
• C)$19,588
• D)$20,000

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Definitions:

Unplanned Investments

Financial allocations into assets or ventures without prior strategy or consideration, often leading to higher risk.

Technology Shares

Stocks or equity interests in companies that operate within the technology sector.

Informational Report

A document that provides data, facts, and feedback without analysis or recommendations, intended to inform the reader.

Process

Process refers to a series of actions or steps taken to achieve a particular end.