Your Neighbour Makes You the Following Offer

question 340

Multiple Choice

Your neighbour makes you the following offer. He would like to borrow $10,000 today. He will repay the $10,000 by making 10 yearly payments with the first payment being made at the end of this
Year. If the payments are to grow by 10% each year and the appropriate discount rate is 12%, how
Much will your neighbour have to pay at the end of the first year?

• A) $108.98
• B) $1,212.97
• C) $1,627.45
• D) $1,769.84
• E) $1,867,94

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Definitions:

Equal

Having the same value, quantity, measure, or meaning as another.

Population Standard Deviation

A measure of the amount of variation or dispersion of a set of values in a population.

Data

A compilation of statistics and information for analysis or reference purposes.

Equal

Having the same value, quantity, measure, or significance in comparison.