Final answer:
The annual interest payable by Green Ltd. on the $50,000 loan at a 4% annual interest rate is $2,000. This interest is due each December 31 for five years until the loan matures.
Step-by-step explanation:
The question pertains to calculating the annual interest payable on a loan. Since Green Ltd. borrowed $50,000 on 1/1/2021 from XYZ Bank for 5 years at a 4% annual interest rate, we can calculate the interest payable annually using the formula for simple interest: Interest = Principal × rate × time. As the interest is payable annually, the time period (t) for each interest payment calculation is 1 year.
To find the annual interest, we can plug in the values as follows:
$50,000 (Principal) × 0.04 (Rate) × 1 (Time) = $2,000. Hence, Green Ltd. will pay $2,000 in interest to XYZ Bank each December 31st until the principal is due on December 31, 2025.