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Peter arranged for a loan from the Credit Union managed by Wendy and John. This loan was obtained to provide financial support for his fast-growin family.
He is supposed toreceive Php 200,000 now and at the end of each year for the nextthree years. As his children would bythen be in the university, he arranged to receive Php 300,000 at the end of the fourth year, increasing by Php 100,000 every yearfo the next three years (end of fourth year not included).
Another option is to receive the equivalent amount at the end ofthe second year, with the approval of the Credit Union
a. What is the value of this amount, given that interest on the Credit Union's loans is 10%?
b. What is the value ofthe loan at the end of year 7?
c. What are the equivalent uniform end of year cash flows for 7 years ?