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Charlie owes Joe $8,000 on a note that is due in five years with accumulated interest at 6%. Joe has an investment opportunity now that
Charlie owes Joe $8,000 on a note that is due in five years with accumulated interest at 6%. Joe has an investment opportunity now that he thinks will earn 18%. There's a chance, however, that it will earn as little as 4%. A bank has offered to discount the note at 13.2% and give Joe cash that he can invest today.
- How much ahead will Joe be if he takes the bank's offer and the investment does turn out to yield 18%? Do not round intermediate calculations. Round FVF and PVF values to 4 decimal places. Round the answer to 2 decimal places.
- $
- How much behind will he be if the investment turns out to yield only 4%? Do not round intermediate calculations. Round FVF and PVF values to 4 decimal places. Round the answer to 2 decimal places.
- $
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