A Bank Is Negotiating a Loan

question 97

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
• E)$18,000

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Definitions:

Pituitary

A small, pea-sized gland located at the base of the brain, crucial for controlling various hormones that regulate growth, metabolism, and reproductive functions.

Ovaries

Female reproductive organs in which eggs (ova) are produced, along with key hormones like estrogen and progesterone.

Endometrium

The mucous membrane lining the interior of the uterus, which thickens during the menstrual cycle in preparation for possible implantation of an embryo.

Oogenesis

The process of egg cell development in females, beginning with the differentiation of germ cells into primary oocytes and ending with the formation of a mature ovum.