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Your client has a debt that she may repay by paying $5,000 now or $10,000 in...

Your client has a debt that she may repay by paying $5,000 now or $10,000 in four years’ time. If

the interest rate is 14% p.a. compounded monthly, would you advise her to repay the debt now or

in four years?

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Answer #1

So, the client should repay the debt now by paying $5000 as the present value of $10000 in four years time is higher.

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