Why is the Future Value (FV) taken as zero (0) in loan repayment calculations?
Answer & explanation
Correct answer: option 3
The correct answer is option 3- The loan is fully paid off at the end of the term.
At the end of the loan period, the (balance) amount payable will be zero assuming that the repayments are made on regular basis. Therefore, the future value (FV) is taken as zero.