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What interest rate would earn on the arrangement

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Problem 1: . A 'friend' would like to borrow some money from you now and repay you in two years. You consider the friend to be a reasonable risk. He wants to borrow an amount from you so that you earn 8% on your loan. He will pay you $2,000 two years from today. How much would you loan him to earn an 8% return?

Problem 2: As a plan b, your 'friend' from above offers to borrow $3,000 today and repay you $3,800 in four years. What interest rate would you earn on this arrangement?

Reference no: EM132822659

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