Which option is better for milly

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Reference no: EM132000447

Question: Milly's father has offered to give her one of the following two options: 1. a cash gift of $10,000 now, or 2. an interest free loan of $50,000 now. The loan would be repaid in five equal annual payments over the next five years. Assume Milly's opportunity cost of funds is 7%. In present value terms, which option is better for Milly, and how much better is it?

Reference no: EM132000447

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