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Your friend wants to borrow $6,000 from you and gives you three options for repayment.Assuming a discount rate of 4.5%, which of the following
Your friend wants to borrow $6,000 from you and gives you three options for repayment. Assuming a discount rate of 4.5%, which of the following options should you choose?
Option A: $1,600 a year for the next 4 years
Option B: $7,000 lump sum paid 3 years from now
Option C: $750 a year for the next 12 years
A. Option C because it is the highest net present value
B. You should not lend the money because all options are negative NPV investments
C. You are indifferent because they all have the same net present value
D. Option A because it is the highest net present value
E. Option B because it is the highest net present value
