Indifferent between making this loan and putting your money

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Reference no: EM131814680

How much would you lend your best friend if she could repay you 1000 in one year and 2000 in 3 years if your best alternate use of money pays a rate of return of 5% for each of the next two years and 8% in the third year. Prove that you are indifferent between making this loan and putting your money in the bank for 3 years (show what you would have in both cases after 3 years).

Reference no: EM131814680

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