Question: Suppose that you need to borrow $2000 from your local bank, which offers a discount rate of 7.75 % if you pay off your loan

Suppose that you need to borrow $2000 from your local bank, which offers a discount rate of 7.75 % if you pay off your loan in 2 years. Use this information to answer the following questions.

1. How much would you expect to receive as a proceeds?

2. What should be the loan amount if you need to get the entire $2000?

3. What if you want to get $2000 right away but you want to limit your loan to $2200 and pay it off in 3 years? Assume that the bank would agree, but only if they change the discount rate. What would be the new discount rate?

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