If ABC must have loan proceeds of $540,000, then it must borrow
A) $540,000
B) $600,000
C) $486,000
D) $660,000.

Question

Quizplus · Accepted Answer

To determine the correct amount ABC must borrow to have loan proceeds of $540,000, we need to consider any potential deductions from the loan amount, such as processing fees or interest deducted upfront. Without specific details on the rate of such deductions, if we assume a common scenario where a bank or lender charges a fee or takes a percentage upfront, borrowing exactly $540,000 would not leave ABC with $540,000 in hand. Therefore, ABC would need to borrow more than $540,000 to account for these deductions and still end up with $540,000 in proceeds. Option B, $600,000, suggests borrowing more to cover such costs, making it the correct choice based on the information provided and typical loan processing practices.

If ABC Must Have Loan Proceeds of $540,000, Then It