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Compute how much should your bank lend to Arti

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Reference no: EM133094530

Question - You are a credit manager for Second Bank of Terlingua. Your bank is considering a loan to Arti Choke, a property developer in Terlingua. The structure of the loan is such that Arti would agree to pay back $20 million per year for 10 years, with the first payment in one year. Given the risk of Arti's company, you think that the appropriate interest rate should be 20% per year, compounded annually. Given this rate and the structure of the loan, compute how much should your bank lend to Arti?

Reference no: EM133094530

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