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Important aspects in running a small business

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Suppose you take out a loan of $10,000, repayable by five equal annual instalments. Theinterest rate is 10% per year.

(a) How much do you need to repay per year to the nearest cent if payments are due at the end of each year?

(b) What is the total amount of money repaid and how much of this are interest payments?

(c) It is often said that cash flow is one of the most important aspects in running a small business. If you were the manager of a small business and you made yearlyrepayments on a loan, would you rather make loan repayments at the beginning ofeach year or at the end of each year? Explain your answer.

Reference no: EM131434758

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