The amount of money the Teachers Credit Union should be willing to loan a developer who will repay the loan in a lump sum amount of $840,000 two years from now at the bank’s interest rate of 10% per year is:

(a) $694,180
(b) $99,170
(c) $1,106,400
(d) $763,650


P = 840,000(P/F,10%,2)
= 840,000(0.8264)
= $694,176
Answer is (a)

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