How many years will it take to pay off a Rs. 11,000 loan with a Rs. 1,241.08 annual payment and a 5% interest rate?
Correct answer: B. 12 years
- A. 6 years
- B. 12 years
- C. 24 years
- D. 48 years
Explanation
Using the present-value annuity formula, Rs. 1,241.08 paid annually at 5% has a present value of about Rs. 11,000 over 12 years. The other periods do not produce the stated loan value at that payment and rate.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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