A company that borrows $10 million and pays this off with a 10-year, 5% interest loan in end-of-year payments of $1,295,045.75 each has a zero balance remaining on this loan at the end of 10 years.

Question

Quizplus · Accepted Answer

The payments described are consistent with an amortizing loan where the borrower pays off the principal and interest over a set period, in this case, 10 years, with a fixed annual payment. The amount specified is calculated to ensure the loan is fully paid off, including interest, by the end of the term.

A Company That Borrows $10 Million and Pays This Off