Your Friend Has a Trust Fund That Will Pay Him

question 16

Multiple Choice

Your friend has a trust fund that will pay him $100,000 at the end of 10 years.Your friend,however,wants his money today.He promises to sign his trust fund over to you if you give him some money today.You require a 20% interest rate on money you lend to friends.How much would you be willing to lend under these terms?

• A)$16,151
• B)$50,000
• C)$80,000
• D)$0-it would be impossible to earn 20% interest on the loan.