Imagine that DHL borrowed capital that needed to be repaid i

Imagine that DHL borrowed capital that needed to be repaid in 5 years. If DHL paid $150,000 at the end of each year at 10% interest compounded annually, what was the original loan amount? Use Table 13.1.

$750,000 <<< That is not the answer, I do know that.

$915,765

$757,500

$828,844

$2,390,613

TABLE 13.1 Ordinary annuity table: Compound sum of an annuity of l 2%. Period 6% 8% 9% 0% 0000 0000 1.0000 1.0000 1.0000 1.0000 000 I 0000 0000 1.0000 1.0000 2.0200 2.0300 2.0400 2.0500 2.0600 2.0700 2.0800 2.0900 2.1000 2. I 100 2.1200 2.1300 3.0604 3.0909 3.1216 3.1525 3.1836 3.2149 3.2464 3.278 3.3744 3.3100 3.3421 3.4069 4.1216 4.1836 4.2465 4.3 01 4.3746 4.4399 4.506 4.573 I 4.6410 4.7097 4.7793 4.8498 5.2040 5.3091 5.4163 5.5256 5.6371 5.7507 5.8666 5.9847 6.105 I 6.3528 6.4803 6.30 6.4684 6.6330 6.8019 6.9753 7.1533 7.3359 7.5233 7.7156 7.9129 8.1152 8.3227 7 7.4343 7.6625 7.8983 8.1420 8.3938 8.6540 8.9228 92004 9.4872 9.7833 0.0890 0.4047 8 8.5829 88923 9.2142 95491 98975 10.2598 10.6366 IL0285 359 15.4157 40.4174 17 20.0120 21.7616 23.6975 25.8403 282128 30.8402 33.7503 36.9737 40.5447 44.5008 48.8837 53.7390 21.4122 23.4144 41.3014 61.725 25.6454 28.1323 30.9056 33.9990 37.4503 45.5992. 50.3959 55.7497 25.1169 22.8405 27.6712 30.5389 33.7599 37.3789 41.4463 46.0185 51.159 56.9395 63.4397 70.7494 20 24.2973. 26.8704 29.778 33.0659 36.7855 40.9954 45.7620 51.1602 57.2750 64.2028 72.0524 80.9468 36.4593 41.6459 54.8644 32.0302 47.7270 63.2489 73.1060 84.7010 98.347 4.4133 33.3338. 55.6194 66.4386 40.5679 47.5754 56.0849 79.0580 94.4606 3.2833 36.3077 64.494 99.0209 241.3327 293.1989 54.7616 60.4017 75.4012 95.0254 20.7993 99.6346 259.0569 337.883 442.5928 58 I 8260 767.0913 013.7030 84.5790 2.7968 52.6669 209.3470 290.335 406.5277 573.77 815.0853 63.9090 668.7710 2400.0180 3459.5010 Note: This is only a sampling of tables available.The Business Math Handbook shows tables from to 15%

Solution

see the table 10 % , t = 5 years ,value = 6.1051

hence

1 $ - compounded sum is $ 6.1051

for $150,000 - 150000 * 6.1051 =   915765

hence option b )is right