Supppose you lend a friend $100 on January 1st, and in return she o↵ers to pay you back $10 at the start of each month (including this month, for some weird reason) for one year (the last payment is January 1st of the next year). What is the present value of this deal if you assume a market rate of 5% APR compounding monthly? Is the present value worth more than the $100 you leant her? (You don’t have to use a calculator for this problem, but you might want to).
Supppose you lend a friend $100 on January 1st, and in return she o↵ers to pay you back $10 at the start of each month (including this month, for some weird reason) for one year (the last payment is January 1st of the next year). What is the present value of this deal if you assume a market rate of 5% APR compounding monthly? Is the present value worth more than the $100 you leant her? (You don’t have to use a calculator for this problem, but you might want to).
Calculus: Early Transcendentals
8th Edition
ISBN:9781285741550
Author:James Stewart
Publisher:James Stewart
Chapter1: Functions And Models
Section: Chapter Questions
Problem 1RCC: (a) What is a function? What are its domain and range? (b) What is the graph of a function? (c) How...
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Supppose you lend a friend $100 on January 1st, and in return she o↵ers to pay you back $10 at the start of each month (including this month, for some weird reason) for one year (the last payment is January 1st of the next year). What is the present value of this deal if you assume a market rate of 5% APR compounding monthly? Is the present value worth more than the $100 you leant her? (You don’t have to use a calculator for this problem, but you might want to).
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