Question
In: Finance
Your brother has asked you for a loan and has promised to payyou $7,350 at...
Your brother has asked you for a loan and has promised to pay you $7,350 at the end of three years. If you normally invest to earn 6.00 percent per year, how much will you be willing to lend to your brother if you view this purely as a financial transaction (i.e., you don’t give your brother a special deal)? (If you solve this problem with algebra round intermediate calculations to 6 decimal places, in all cases round your final answer to the nearest penny.)
Amount to be invested today
Solutions
Expert Solution
Future cashflow value=Amount to be invested today*(1+intrest rate)^number of years
Putting values
7350=Amount to be invested today*(1+.06)^3
Solving we get amount to be invested today=6171.201730
Thus amount to be invested today=$6171.20 (Amount willing to lend today)
jeff jeffy answered 2 years agoRelated Solutions
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