Becky needs another $1,100 in her vehicle fund to purchase the car she wants. Her parents offer

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Becky needs another $1,100 in her vehicle fund to purchase the car she wants. Her parents offer to loan her the money, but want to teach her about the time value of money. They offer to have her repay the loan in the future using money from freelance work. They agree that she will repay $475 at each of her next three booked engagements. These events are 3, 9 and 16 months from now. Assume a 5% cost of capital. Assume there is no risk of default, and that compounding is monthly. What is the NPV of the loan from her parents' perspective?

Posted Date: May 14, 2024 01:34 AM

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Becky needs another $1,100 in her vehicle fund to purchase the car she wants. Her parents offer

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To calculate the Net Present Value NPV of the loan from her parents perspective we need to discount ... View the full answer

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