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5. Leah owes her dad $24,000. They have agreed on a payment plan where she pays $7,000 in one year, $8,000 in two years, and $9,000 in three years. Luckily, Leah has managed to win a $35,000 lottery. Her dad has offered to allow her to settle the debt today for $21,000. Assuming a market interest rate of 7.05%, should Leah pay early?

5. Leah owes her dad $24,000. They have agreed on a payment plan where she pays $7,000 in one year, $8,000 in two years, and $9,000 in three years. Luckily, Leah has managed to win a $35,000 lottery. Her dad has offered to allow her to settle the debt today for $21,000. Assuming a market interest rate of 7.05%, should Leah pay early?

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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5. Leah owes her dad $24,000. They have agreed on a payment plan where she pays $7,000 in one year, $8,000 in two years, and $9,000 in three years. Luckily, Leah has managed to win a $35,000 lottery. Her dad has offered to allow her to settle the debt today for $21,000. Assuming a market interest rate of 7.05%, should Leah pay early?
Transcribed Image Text:5. Leah owes her dad $24,000. They have agreed on a payment plan where she pays $7,000 in one year, $8,000 in two years, and $9,000 in three years. Luckily, Leah has managed to win a $35,000 lottery. Her dad has offered to allow her to settle the debt today for $21,000. Assuming a market interest rate of 7.05%, should Leah pay early?
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