saab bank

Problem 2 SAAB Bank lent a newly graduated engineer $ 2000 at 1-8% per year for 5 years to buy home office furniture. From the bank's perspective (the lender), the investment in this young engineer is expected to produce an equivalent net cash flow of &315.47 for each of 5 years. A = $2000 (A/P, 890, 5) = $ This represents a 8% per year rate of return on the bank's unrecovered balance. Compute the amount of the unrecovered investment for each of the 4 years using: a- The rate of return on the unrecovered balance (correct basis). b- The return on the initial $2000 investment. c- Explain why all the initial $2000 amount is not recovered by the final payment in part (b)