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Bennett's father offers to give him one of the following: a cash gift of $1,000, or an interest free loan of $15,000. The loan is
Bennett's father offers to give him one of the following: a cash gift of $1,000, or an interest free loan of $15,000. The loan is repaid in five equal annual payments over the subsequent five years. Assume Bennett's opportunity cost of funds is 14%. In present value terms, which option is better for Bennett, and how much better is it? The cash gift, by $6,866.16 The eash gift, by 58,373.83 The loan, by $5,830,31 The loan, by $3,700,78
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