Question

A lender lends $18,600, which is to be repaid in annual payments of $3100 for 6 years. Which of the following shows the timeline of the loan from the lender’s perspective?
A) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
-$18,600 $3,100 $3,100 $3,100 $3,100 $3,100

B) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
0 $3,100 $3,100 $3,100 $3,100 $3,100

C) Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
-$18,600 $3,100 $3,100 $3,100 $3,100 $3,100 $3,100

C) Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
-$18,600 $3,100 $6,100 $8,100 $8,100 $9,100 $10,100

Answer 1

Answer:

The correct option is option C

$18,600 $3,100 $3,100 $3,100 $3,100 $3,100 $3,100

Explanation:

Year0- $18600

Year1 - $3100

Year2 - $3100

Year3. $3100

Year5. $3100

Year6. $3100

That is the timeline of the loan from the lender's perspective.