Your client wants to borrow $60,000 over a 5-year period. He has been offered with two payment
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Question:
- Your client wants to borrow $60,000 over a 5-year period. He has been offered with two payment options: option A is to pay back the $60,000 in monthly instalments and option B is to pay back the entire $60,000 with the interest at the end of the 5-year loan period. Describe the concept of the ‘Time value of Money’ to your client and how this concept applies to these options. Also, comment on the relevance of the time value of money to the field of finance.
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