Answered: Charles has just taken on the…

Charles has just taken on the conditions of the loan, he must make payments of $1,200 per year for 15 years in order to repay the full amount of the loan. How much money did Charles borrow? $8,173.04

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 23PROB

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Concept explainers

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

Question

Charles has just taken out a loan at an annual rate of 12%. Based
on the conditions of the loan, he must make payments of $1,200
per year for 15 years in order to repay the full amount of the loan.
How much money did Charles borrow?
O $8.173.04
O $44,735.66
O $18,000.00
O $6,504.74

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