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Problem Your brother needs a $5,000 loan to go to college. Because of his poverty, he will pay nothing for the next four years. Five
Problem Your brother needs a $5,000 loan to go to college. Because of his poverty, he will pay nothing for the next four years. Five years from today he will begin paying you $2,500 a year for the next 4 years. The first payment occurs 5 years from today, and the total of the four payments will be $10,000. a. If your minimum ROR is 8%, then is this an acceptable investment? Explain. b. For the same payment schedule but with a 5% rate of inflation, is this an acceptable investment? Note that your brother pays you $2,500 a year regardless of the inflation rate. Provide quantitative justification for your decision
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