Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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. 

 

Step by Step Solution

3.34 Rating (151 Votes )

There are 3 Steps involved in it

Step: 1

Heres how to calculate the amount you can lend your cous... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Microeconomics

Authors: Hal R. Varian

8th edition

393934241, 978-0393934243

More Books

Students also viewed these Finance questions

Question

What is t he nervous syst em? (p. 1 9)

Answered: 1 week ago