Milly's father has offered to give her one of the following two options: 1. a cash gift of $1,000 now, or 2. an interest free loan of $15,000 now. The loan would be repaid in five equal annual payments over the next five years. Assume Milly's opportunity cost of funds is 14%. In present value terms, which option is better for Milly, and how much better is it? The loan, by $5.830.31 No answer text provided. The loan, by $3,700.76 No answer text provided.
Milly's father has offered to give her one of the following two options: 1. a cash gift of $1,000 now, or 2. an interest free loan of $15,000 now. The loan would be repaid in five equal annual payments over the next five years. Assume Milly's opportunity cost of funds is 14%. In present value terms, which option is better for Milly, and how much better is it? The loan, by $5.830.31 No answer text provided. The loan, by $3,700.76 No answer text provided.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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there are only two options. either one loan number or the other loan number
Transcribed Image Text:Milly's father has offered to give her one of the following two options: 1. a cash gift of $1,000 now, or
2. an interest free loan of $15,000 now. The loan would be repaid in five equal annual payments over
the next five years. Assume Milly's opportunity cost of funds is 14%. In present value terms, which
option is better for Milly, and how much better is it?
The loan, by $5,830.31
No answer text provided.
The loan, by $3,700.76
No answer text provided.
Transcribed Image Text:Milly's father has offered to give her one of the following two options: 1. a cash gift of $1,000 now, or
2. an interest free loan of $15.000 now. The loan would be repaid in five equal annual payments over
the next five years. Assume Milly's opportunity cost of funds is 14%. In present value terms, which
option is better for Milly, and how much better is it?
The loan, by $5.830.31
No answer text provided.
The loan, by $3,700.76
No answer text provided.
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