Present Value of Multiple Annuities a Small Business Owner Visits

question 134

Multiple Choice

Present Value of Multiple Annuities A small business owner visits his bank to ask for a loan.The owner states that he can repay a loan at $2,000 per month for the next three years and then $1,000 per month for the two years after that.If the bank is charging customers 8.5 percent APR,how much would it be willing to lend the business owner?

• A)$80,419.29
• B)$6,494.66
• C)$21,780.74
• D)$96,000.00

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Definitions:

System Of Assumptions

A coherent collection of beliefs and theories that form the basis for a particular methodology or approach to understanding and interpreting the world.

Personal Opinion

An individual's specific thoughts or beliefs about a subject, which may not be based on fact or knowledge and can vary greatly from person to person.

Empirical Proof

Evidence that serves to either support or counter a scientific theory or hypothesis, obtained through direct observation or experimentation.

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