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1 . Today is T = 0 . You borrow $ 3 0 0 , 0 0 0 today at a rate of interest of

1 .

Today is T

= 0 .

You borrow $

300, 000

today at a rate of interest of

5 % .

You agree to repay the loan in

6

equal, annual installments. The first payment is to be made at T

= 1 .

What is the amount of the principal reduction associated with the third payment?

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