Kenworth Imaging got a $700,000 loan that came with a choice of two different repayment schedules. In Plan 1, the company would have to repay the loan in 4 years with four equal payments at an interest rate of 10% per year. In Plan 2, the company would repay the loan in 3 years, with each payment twice as large as the preceding one. How much larger in dollars was the final payment in Plan 2 than the final payment in Plan 1?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Kenworth Imaging got a $700,000 loan that came
with a choice of two different repayment schedules.
In Plan 1, the company would have to repay the loan in 4 years with four equal payments at an
interest rate of 10% per year. In Plan 2, the company
would repay the loan in 3 years, with each
payment twice as large as the preceding one. How
much larger in dollars was the final payment in
Plan 2 than the final payment in Plan 1?

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