Question
Discount loan (interest and principal at maturity).Chuck Ponzi has talked an elderly woman into loaning him $40 comma 000 for a new business venture. She
Discount loan (interest and principal at maturity).Chuck Ponzi has talked an elderly woman into loaning him $40 comma 000 for a new business venture. She has, however, successfully passed a finance class and requires Chuck to sign a binding contract on repayment of the $40 comma 000 with an annual interest rate of 10 % over the next 5 years.
Determine the cash flow to the woman under a discount loan, in which Ponzi will have a lump-sum payment at the end of the contract. What is the amount of payment that the woman will receive at the end of years 1 through 4 ? $0 (already have this answer)
What is the amount of payment that the woman will receive at the end of the loan in year 5 ?
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