Zhang Company Has a Loan Agreement That Provides It with Cash

question 66

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 factor for 4 periods at 6% is 0.7921. What is the amount of cash that Zhang Company receives today?

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Definitions:

Escalation of Commitment

A behavior pattern in which an individual or group continues to invest in a decision despite evidence of its ineffectiveness or failure.

Economic

Pertaining to the production, distribution, and consumption of goods and services, as well as the management of financial resources in a community or society.

Managerial

Pertaining to the activities, responsibilities, and skills of managers in planning, organizing, leading, and controlling within an organization.

Technical

Relating to or involving the practical application of scientific knowledge, especially in industrial or mechanical fields.