company has arranged a four-year loan for $30,000 with simple annual interest

jagguarpaw January 17, 2017 0 Comments

Question: A company has arranged a four-year loan for $30, 00…

A company has arranged a four-year loan for $30,000 with simple annual interest of 6% paid annually. In addition, it decides to pay back $10,000, $5000, and $3000 of the principal at the end of years 1, 2, and 3, respectively.

  1. a) Compete a cash flow table from the company’s perspective. Use the following table format.
  2. b) Draw a cash flow diagram to represent this loan from the company’s perspective.

 

End of year Amount received Principal paid Principal outstanding Interest paid Total cash flow
 0
1
2
3
4