Your cousin is entering medical school next fall and asks you for financial help. He needs $65,000each year for the first two years. After that, he is in residency for two years and will be able to pay you back$10,000each year. Then he graduates and becomes a fully qualified doctor, and will be able to pay you$40,000each year. He promises to pay you$40,000for 5 years after he graduates. Are you taking a financial loss or gain by helping him out? Assume that the interest rate is5%and that there is no risk.

Your cousin is entering medical school next fall and asks you for financial help. He needs $65,000each year for the first two years. After that, he is in residency for two years and will be able to pay you back$10,000each year. Then he graduates and becomes a fully qualified doctor, and will be able to pay you$40,000each year. He promises to pay you$40,000for 5 years after he graduates. Are you taking a financial loss or gain by helping him out? Assume that the interest rate is5%and that there is no risk.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 33P

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