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You loan your friend $100 subject to the following repayment schedule: $20/months for six months. You stand to profit $20 form the loan. There is
You loan your friend $100 subject to the following repayment schedule: $20/months for six months. You stand to profit $20 form the loan. There is also a chance your friend may not make the final payment of $20. Given this information, find the difference betwwen the NPVs depending wherther the final paymen occurs. Assume a %5 discount rate. What do the NPV rules tell you?
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