You need to borrow money today from your father. You can make payments like this: 1st...

You need to borrow money today from your father. You can make payments like this: 1st year: $1000, 2nd year: $2,000, 3rd year: $3,000, 4th year: $4,000, 5th year: $5,000. Your dad says that hes getting 4% on his CDs, compounded annually, and you'll need to pay him the same rate. How much can you borrow?

Expert Solution

Ans $ 13006.49

Year	Project Cash Flows (i)	DF@ 4%	DF@ 4% (ii)	PV of Project ( (i) * (ii) )

1	1000	1/((1+4%)^1)	0.962	961.54
2	2000	1/((1+4%)^2)	0.925	1,849.11
3	3000	1/((1+4%)^3)	0.889	2,666.99
4	4000	1/((1+4%)^4)	0.855	3,419.22
5	5000	1/((1+4%)^5)	0.822	4,109.64
		PV		13,006.49

jeff jeffy answered 8 months ago

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