Today you borrow $10,600 to pay for your expected college costs over the next 4 years, including a master's degree. 2 years from now, you determine that you need an additional $4,100 so you borrow this additional amount. Starting 4 years from the original loan (2 years from the 2nd loan), you begin to repay your combined debt by making annual payments of $2,700. You will make these payments for 10 years. Draw a cash flow diagram of this situation from your perspective. The cash flow diagram can be first represented by end of year cash flows, Aj, for years. j - 0,1,2,...13. If there is no amount for a box enter O. All boxes must be filled. If entering a negative number use negative (-) sign preceding the number.
Today you borrow $10,600 to pay for your expected college costs over the next 4 years, including a master's degree. 2 years from now, you determine that you need an additional $4,100 so you borrow this additional amount. Starting 4 years from the original loan (2 years from the 2nd loan), you begin to repay your combined debt by making annual payments of $2,700. You will make these payments for 10 years. Draw a cash flow diagram of this situation from your perspective. The cash flow diagram can be first represented by end of year cash flows, Aj, for years. j - 0,1,2,...13. If there is no amount for a box enter O. All boxes must be filled. If entering a negative number use negative (-) sign preceding the number.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Today you borrow $10,600 to pay for your expected college costs over the next 4 years, including a master's degree. 2 years from now,
you determine that you need an additional $4,100 so you borrow this additional amount. Starting 4 years from the original loan (2
years from the 2nd loan), you begin to repay your combined debt by making annual payments of $2,700. You will make these payments
for 10 years. Draw a cash flow diagram of this situation from your perspective.
The cash flow diagram can be first represented by end of year cash flows, Aj, for years, j - 0,1,2,...13.
If there is no amount for a box enter O. All boxes must be filled. If entering a negative number use negative (-) sign preceding the number.
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