A student borrowed $5000 from her parents and the interest been compounded annually at that rate, what would have been the value of the gift? Equivalence 3-8 Which is more valuable, $20,000 received now or $5000 per year for 4 years? Why? Explain the term time value of money in your own words. 3-9 Magdalen, Miriam, and Mary June were asked to consider two different cash flows: $500 that they could receive today and $1000 that would be received 3 years from today. Magdalen wanted the $500 dollars today, Miriam chose to collect $1000 in 3 years, and Mary June was indifferent between these two options. Can you offer an explanation of the choice made by each woman? Contributed by Hamed Kashani, Saeid Sadri, and Baabak Ashuri, Georgia Institute of Technology A agreed to repay it at the end of 4 years, together with 6% simple interest. (a) How much is repaid? (b) Do you ever borrow or lend money with family and friends? Given the time value of money, is it ethical not to pay interest? How does the amount or duration of the loan matter?