Jackson has a loan that requires a $17,000 lump sum payment at the end of four years.The interest rate on the loan is 5%,compounded annually.How much did Jackson borrow today? (PV of $1,FV of $1,PVA of $1,and FVA of $1) $\bold{\text{(Use appropriate factor(s) from the tables provided.) }}$

A) $16,150
B) $13,600
C) $11,504
D) $13,986
E) $15,343

Question

Jackson has a loan that requires a $17,000 lump sum payment at the end of four years.The interest rate on the loan is 5%,compounded annually.How much did Jackson borrow today? (PV of $1,FV of $1,PVA of $1,and FVA of $1)

\bold{\text{(Use appropriate factor(s) from the tables provided.) }}

A) $16,150
B) $13,600
C) $11,504
D) $13,986
E) $15,343

TERESA CHRISTINA ORTIZ · Accepted Answer

Final Answer : D, Explanation :  We need to find the present value of the loan, which is the amount Jackson borrowed today. We can use the formula:PV = FV/(1 + i)^nwhere FV is the future value of the loan, i is the interest rate, and n is the number of periods.In this case, FV = $17,000, i = 5%, and n = 4.Using the FV of $1 table, we can find the factor for (1 + i)^n = (1 + 0.05)^4 = 1.2155.Therefore, PV = $17,000/1.2155 = $13,986.So Jackson borrowed $13,986 today. The answer is D.

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