What if rational discounting is used

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Reference no: EM133331685

Discount - present value

Question: Company X took out a bank loan and committed to repaying it in three payments of 50 thousand euros, 70 thousand euros and 100 thousand euros, due in 2, 5 and 9 years respectively. Having had excellent sales and net results, Company X decided to anticipate the payment of these debts, proposing to the bank their immediate settlement (today).
The annual interest rate is 4%. How much did Company X have to pay today if commercial discounting is used? What if rational discounting is used?

Reference no: EM133331685

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