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Question 15 pts You have just graduated but you face the dire consequences of your decision to pursue college education and learn that you owe a total of $70000 in student and personal loan

Question 2: [____15 pts] You have just graduated, but you face the dire consequences of your decision to pursue college education and learn that you owe a total of $70,000 in student and personal loans. Your financial institution proposes two ways for you to pay off your debt. Option 1 requires an immediate payment of the entire amount. Option 2 requires you to pay $30,000 immediately, $2,000 at the end of years 1 through 14, and a second lump sum payment of $60,000 at the end of year 15. Suppose that you won Hoosier Lottery last year and you have the money to pay either way, which option will you choose? Explain. Assume no inflation. Hint: You may find the concept of a counterfactual baseline helpful in making the decision.

 

May 14 2020 View more View Less

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