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.
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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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.
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