A company borrows $50,000 by signing a $50,000, 8% note that requires six equal payments of (round to the nearest dollar) at the end of each year. (The present value of an annuity of six annual payments, discounted at 8% equals 4.6229.)

Question

Business

Isiah Lowery

5 March, 16:34

A company borrows $50,000 by signing a $50,000, 8% note that requires six equal payments of (round to the nearest dollar) at the end of each year. (The present value of an annuity of six annual payments, discounted at 8% equals 4.6229.)

+4

Answers (1)

Know the Answer?

Kylie Hensley · Answer 1

An information is missing on this question but I found the complete details as shown below;

"A company borrows $50,000 by signing a $50,000, 8% note that requires six equal payments of

10816 (round to the nearest dollar) at the end of each year. (The present value of an annuity of six

annual payments, discounted at 8% equals 4.6229.) "

Explanation:

An annuity payment is made in equal amounts for a specified period of time in this case 6 years.

Since the equal payments are made annually and you are given the Present value of the annuity as $50,000 & discount factor of 4.6229, divide the PV by the discount factor. The value of equal payments should be equivalent to the $10816;

=50,000 / 4.6229

= 10815.7217

Next, round the answer to the nearest dollar;

When rounded to the nearest whole number it becomes $10,816.