Today you borrow $10,000 to pay for your expected college costs over the next four years, including a master’s degree. Two years from now, you determine that you need an additional $4,000 so you borrow this additional amount. Starting four years from the original loan (two years from the second loan), you begin to repay your combined debt by making annual payments of $2,880. You will make these payments for 10 years. Draw a cash flow diagram of this situation from your perspective.
Today you borrow $10,000 to pay for your expected college costs over the next four years, including a master’s degree. Two years from now, you determine that you need an additional $4,000 so you borrow this additional amount. Starting four years from the original loan (two years from the second loan), you begin to repay your combined debt by making annual payments of $2,880. You will make these payments for 10 years. Draw a cash flow diagram of this situation from your perspective.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Today you borrow $10,000 to pay for your expected college costs over the next four years, including a master’s degree. Two years from now, you determine that you need an additional $4,000 so you borrow this additional amount. Starting four years from the original loan (two years from the second loan), you begin to repay your combined debt by making annual payments of $2,880. You will make these payments for 10 years. Draw a cash flow diagram of this situation from your perspective.
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