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Homework answers / question archive / A company borrowed $40,800 cash from the bank and signed a 5-year note at 6% annual interest
A company borrowed $40,800 cash from the bank and signed a 5-year note at 6% annual interest. The present value of an annuity factor for 5 years at 6% is 4.2124. The present value of a single sum factor for 5 years at 6% is .7473. The annual annuity payments equal:
A)40800
B)171865.92
C)9685.69
D)30489.84
E)54596.55
The annual annuity payments equal: C.9685.69
Explanation
Annual payment= Borrowed amount/ Present value of an annuity at 5 year for 6%
= 40800/ 4.2124
= 9,685.69
