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A small business received a five-year $1,000,000 loan at a subsidized rate of 3% per year. The firm will pay 3% annual interest payment each
A small business received a five-year $1,000,000 loan at a subsidized rate of 3% per year. The firm will pay 3% annual interest payment each year and the principal at the end of five years. If market interest rates on similar loans are 6% per year, what is the NPV of the loan?
I know they use NPV to get an answer of 126,371, but how??
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