A borrower takes out a loan of 84,000 at an annual effective discount rate of 6%. The loan is to be repaid with annual payments of 10,000. The first payment is due four years after the loan is taken out. Calculate the amount of the drop payment. (7,673.79)

A borrower takes out a loan of 84,000 at an annual effective discount rate of 6%. The loan is to be repaid with annual payments of 10,000. The first payment is due four years after the loan is taken out. Calculate the amount of the drop payment. (7,673.79)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 20P

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Calculating the Return On A Loan

Question

1. A borrower takes out a loan of 84,000 at an annual effective discount rate of 6%. The loan is to
be repaid with annual payments of 10,000. The first payment is due four years after the loan is
taken out. Calculate the amount of the drop payment. (7,673.79)

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