18. A company must repay the bank $10,000 cash in 3 years for a loan it entered into. The loan is at 8% interest compounded annually. The present value factor for 3 years at 8% is 0.7938. The present value of the loan is: A. $10,000. B. $12,400. C. $ 7,938. D. $ 9,200. E. $ 7,600.

19. A company borrowed $300,000 cash from the bank by signing a 5-year, 8% installment note. The present value of an annuity at 8% for 5 years is 3.9927. Each annuity payment equals $75,137. The present value of the note is: A. $ 75,137. B. $ 94,013. C. $ 300,000. D. $ 375,685. E. $1,197,810.

Could you explain how to calculate present value and to do these problems.

answers are

18 C

19 C