Question 4 Adam has been offered an investment that will pay him $500 three years from today. a. If his opportunity cost is 7% compounded annually, what value should he place on this opportunity today? (2 Marks) b. If Adam can purchase this investment for less than the amount calculated in part a, what does that imply about the rate of return that he will earn on the investment? (1 Marks) c. You want to borrow $24,000 for a tax payment. Your friend offers you a loan, and he claims that he will only charge you 10% interest. He calculates that the total interest of the loan will be $24,00010% = $2,400, so he deducts this amount from the loan, gives you $21,600, and tells you to repay $24,000 in one year. Has your friend charged you 10% interest? What is the real interest rate charged on the loan? (2 Marks) d. Andy borrowed $10,000 from his bank and promised to pay back within three years with equal end-of-year payments annually. Charging 13% interest rate, prepare the loan amortization table for Andy.