Discussion
A loan of 100 000 at 10 per cent repaid in 5 equal annual instalments requires each instalment to be about
Answer: A
Correct answer: 26 380
\[ A = 100\,000 \times (A/P, 10\%, 5) = 100\,000 \times 0.2638 \] \[ = 26\,380. \] Over five years the borrower pays 131 900 for 100 000 borrowed, so 31 900 is interest - which is what the capital recovery factor is computing.
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