Chapter4: Time Value Of Money
Section: Chapter Questions
Problem 28P
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Please explain using Excel functions and thank you in advance.
Your dad has agreed to loan you $25000 at a rate of 2% per year for 5 years. Are the two options shown below equivalent in paying off the loan?
Option 1: You pay $500 every year end for 5 years and $25000 at the end of the 5th year
Option 2: You pay $5,500 at the end of the first year, $5,400 at the end of the second year, $5,300 at the end of the third year, $5,200 at the end of the fourth year, and $5,100 at the end of the fifth year.
*Please explain using Excel functions and thank you in advance
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