A company borrowed $40,800 cash from the bank and signed a 5-year note at 6% annual interest

Accounting Dec 17, 2020

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

Expert Solution

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

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