SRL Archive - General

Your friend has a trust fund that will pay him $100,000 at the end of 10 years. Your friend, however, wants his
money today. He promises to sign his trust fund over to you if you give him some money today. You require a 20%
interest rate on money you lend to friends. How much would you be willing to lend under these terms?

Answer is $16,150.55
How do?
Thanks.

Tell him to wait. Seriously it's worth the wait :) especially in the situation countries are in atm. let the dust settle then whipout the pennies!

How is your interest compounded? 20% per year? 20% flat?

I was wondering same… try both and see which gets you the answer I posted on first post.

I remember this stuff somewhat from business pre-calculus, but don't have the text book to reference :s

^yep.. that's the way to solve if it's compounded yearly. 100,000=x*(1.02)^10, solve for x.

Thanks, I got it also! <3

100k/1.20^10 yep, that's 16.5k