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7 . Orlando has decided to open a bookstore / caf and needs to borrow from his sister. In exchange for a lump sum today,
Orlando has decided to open a bookstorecaf and needs to borrow from his sister. In exchange for a lump
sum today, he offers to pay her $ in one year's time, $ in two years' time, $ in three years' time
and another $ in years' time. If the interest rate is what is the lump sum Orlando can expect to
receive from his sister if the net present value NPV is to be equal to zero? That is if his sister should not
make a loss. Show your work. Draw a timeline.
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