Question
You've agreed to lend money to your cousin. Your cousin will pay you back by paying $2,000 in 2 years and another $4,500 in 4
You've agreed to lend money to your cousin. Your cousin will pay you back by paying $2,000 in 2 years and another $4,500 in 4 years. Your cousin wants to pay you the same interest that your bank would pay, which is 7%. How much can you lend your cousin today to get that 7% rate of return? [Note that this is a professor-generated problem, so you do not have the usual aids such as "Show Me An Example". However, this is a standard problem using the most basic PV formula, so you should be able to figure it out without aids. We also worked this problem in the course slides.]Give your answer in dollars and cents, rounded to the closest cent.
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Intermediate Microeconomics
Authors: Hal R. Varian
8th edition
393934241, 978-0393934243
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