A Bank Is Negotiating a Loan

Multiple Choice

A bank is negotiating a loan.The loan can either be paid off as a lump sum of $100,000 at the end of five years,or as equal annual payments at the end of each of the next five years.If the interest rate on the loan is 10%,what annual payments should be made so that both forms of payment are equivalent?

A) $12,000
B) $16,380
C) $19,588
D) $20,000
E) $18,000