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You have lent your friend $8500. Your friend offers you the following instead of paying the $8500 now. End of year Cash flow 1 3400
You have lent your friend $8500. Your friend offers you the following instead of paying the $8500 now.
End of year | Cash flow |
1 | 3400 |
2 | 2500 |
3 | 500 |
4 | 650 |
What is the present value of your friend's payments?
(Using an opportunity cost of capital of 7 percent)
Answer for part 1Would you accept your friend's offer?
Write 1 in the blank if yes
Write 2 in the blank if No
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