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I just borrowed $150 from the bank. My interest rate is 3.75% and cost of capital (appropriate discount rate) is 4.5%. We have agreed that
I just borrowed $150 from the bank. My interest rate is 3.75% and cost of capital (appropriate discount rate) is 4.5%. We have agreed that I will not pay any periodic interest payments, and instead pay all interest and principal at the end of the fifteen (15) years.
What is the present value (to me) of the payment I will make in 15 years?
NOTE: The loan compounds annually.
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