Zhang Company Has a Loan Agreement That Provides It with Cash

question 115

Short Answer

Zhang Company has a loan agreement that provides it with cash today,and the company must pay $25,000 4 years from today.Zhang agrees to a 6% interest rate.The present value of 1 (single sum)for 4 periods at 6% is 0.7921.What is the amount of cash that Zhang Company receives today?

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Definitions:

Government Deregulation

The process of reducing or eliminating government rules controlling how businesses can operate, often to encourage more competition and innovation.

Economies of Scale

Enterprises gain cost benefits from their scale of operation, which typically results in the cost per unit of output decreasing as the scale increases.

Economic Profit

The total revenue of a business minus its explicit and implicit costs.

Government Regulation

Policies and rules established by government bodies to control and guide the activities of businesses and individuals within the society.