Your Friend Wants to Borrow $2,000 and Pay It Back

question 20

Multiple Choice

Your friend wants to borrow $2,000 and pay it back in one year. She is someone who keeps her word. She agrees to repay you $2,080 in one year. The bank annual interest rate is 5%. Which of the following statements is TRUE?

• A)You will be financially worse off if you make the loan rather than deposit $2,000 in the bank.
• B)You will be financially better off if you make the loan rather than deposit $2,000 in the bank.
• C)The present value of $2,080 payable in one year with an interest rate of 5% is $1,904.76, which is less than the value of the $2,000 you have been asked to lend.
• D)None of the statements is true.

Analyze the relationship between depreciation and net investment and their implications for the economy.

Understand the impact of corporate structure on liability and investment.

Identify the factors influencing the decision to undertake investment projects.

Examine the effects of economic cycles on investment levels.

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Definitions:

Social Comparison Theory

A theory suggesting individuals determine their own social and personal worth based on how they stack up against others.

Self Identification

The process by which an individual identifies or categorizes themselves in terms of particular groups or affiliations, such as cultural, gender, or professional identity.

Information And Evaluation

This involves the process of gathering data and assessing its relevance and quality to inform decision-making.

Well-Learned Responses

Reactions or behaviors that have been practiced and reinforced over time, becoming automatic or habitual.