Today, a businessman borrowed money to be paid in 10 equal quarterly payments starting at the end 2 years. If the interest rate is 10% compounded quarterly and the quarterly payment is P2,000, how much did he borrow? A P17, 504.13 P16,660 P14,366.45 P14,725.61

Today, a businessman borrowed money to be paid in 10 equal quarterly payments starting at the end 2 years. If the interest rate is 10% compounded quarterly and the quarterly payment is P2,000, how much did he borrow? A P17, 504.13 P16,660 P14,366.45 P14,725.61

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section4.17: Amortized Loans

Problem 1ST

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Concept explainers

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

Question

Today, a businessman borrowed money to be paid in 10 equal quarterly payments starting at the end 2 years. If
the interest rate is 10% compounded quarterly and the quarterly payment is P2,000, how much did he borrow?
A
P17, 504.13
P16,660
P14,366.45
P14,725.61

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