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

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You need to borrow money today from your father. You can makepayments 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 hesgetting 4% on his CDs, compounded annually, and you'll need to payhim the same rate. How much can you borrow?

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3.7 Ratings (453 Votes)

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

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You need to borrow money today from your father. You can makepayments 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 hesgetting 4% on his CDs, compounded annually, and you'll need to payhim the same rate. How much can you borrow?

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

Free

90.2K

Verified Solution

Question

Finance

You need to borrow money today from your father. You can makepayments 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 hesgetting 4% on his CDs, compounded annually, and you'll need to payhim the same rate. How much can you borrow?

Answer & Explanation Solved by verified expert

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