Your sibling wants to borrow money from you that she can repay in four equal annual...

Your sibling wants to borrow money from you that she can repay in four equal annual payments of $1,000 at the end of each of the next four years. If you charge 3% interest rate on the loan to your sibling, and that is the competitive interest rate, what would be the amount that you can lend to her today?

Group of answer choices

$ 3,717.10

$ 3,828.61

$ 3,956.72

$ 4,310.13

$ 3,,549.95

$ 3,289.55

Solutions

Expert Solution

Present value = P{[1 - (1 + r)^-n] / r}

Present value = $1,000{[1 - (1 + 0.03)^-4] / 0.03}

Present value = $3,717.10

jeff jeffy answered 2 years ago

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