You Need to Borrow $2,000 Quickly, and the Local Pawn

question 52

Multiple Choice

You need to borrow $2,000 quickly, and the local pawn shop will give it to you if you promise to repay them $200.92 monthly over the next year.
Suppose that the pawn shop's cost of funds is 12%, compounded monthly. From its viewpoint, what
Is the NPV of this deal?

• A) $44.11
• B) $111.01
• C) $226.17
• D) $261.37
• E) $292.01

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