A reliable friend has asked you for a loan. You are pondering various proposals for repayment. 1.
Question:
1. Repayment of a $30,000 lump sum 4 years hence. How much will you lend if your desired rate of return is (a) 10% compounded annually, and (b) 20% compounded annually?
2. Repeat requirement 1, but assume the interest rates are compounded semiannually.
3. Suppose the loan is to be paid in full by equal payments of $8,000 at the end of each of the next 4 years. How much will you lend if your desired rate of return is (a) 10% compounded annually, and (b) 20% compounded annually?
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Related Book For
Introduction to Financial Accounting
ISBN: 978-0133251036
11th edition
Authors: Charles Horngren, Gary Sundem, John Elliott, Donna Philbrick
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