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.
- a) Compete a cash flow table from the company’s perspective. Use the following table format.
- 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 |
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