Question
Suppose your friend needs exactly $10,000 to invest in real estate, and you are deciding whether or not to lend them the money. You learned
Suppose your friend needs exactly $10,000 to invest in real estate, and you are deciding whether or not to lend them the money. You learned about net present value as a decision making tool, and want to put it to use. Your friend promises to return the money in a lump sum 20 years from now, along with a lump sum of $100,000 in interest (a total of $110,000.) You believe you could gain an annual return of 12% through similar-risk alternative investments over that same 20 years. What is the Net Present Value of your friend's proposal?
Enter a whole number below, with no dollar sign (no "$"), rounding to the nearest whole number, and
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