Exercises in Compound Interest Study Appendix 9. A reliable friend has asked you for a loan. You are pondering various proposals for repayment. 1. Repayment of a $20,000 lump sum 4 years hence. How much will you lend if your desired rate of return is

(a) 10% compounded annually,

(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 $5,000 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?