Suppose Matt's New Cars obtained a loan in which the company will need to pay $10,000 in 3 years including both principal and a 4% interest. How much money did the company borrow? Group of answer choices a) $9,615.38 b) $8,889.96 c) $8,800 d) $11,248.64

Suppose Matt's New Cars obtained a loan in which the company will need to pay $10,000 in 3 years including both principal and a 4% interest. How much money did the company borrow? Group of answer choices a) $9,615.38 b) $8,889.96 c) $8,800 d) $11,248.64

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 14P

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Concept explainers

Amortized Loans

The term "amortization" refers to spreading the value of a loan or a debt over a series of regular payments or installments comprising of both the principal and interest amount. It generally involves the process where in the value of a loan or an intangible asset is written down over its maturity period.

Question

Suppose Matt's New Cars obtained a loan in which the company will need to pay $10,000 in 3 years including both principal and a 4% interest. How much money did the company borrow?

Group of answer choices

a) $9,615.38

b) $8,889.96

c) $8,800

d) $11,248.64

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