Discussion
The size of an equal loan instalment is obtained by multiplying the principal by
Answer: D
Correct answer: the capital recovery factor
The instalment is the annual equivalent of the present sum borrowed, which is precisely what \( (A/P, i, n) \) gives. Multiplying the principal by it produces the payment that repays the loan with interest over the term, and the same factor gives the annual equivalent of any capital cost.
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