Answer:
52.85 / 50.14 / yes
Explanation:
the key to answer this question is to understand the logic of present values / future values:
[tex]FV=PV*(1+i)^{n}[/tex]
[tex]PV=FV*(1+i)^{-n}[/tex]
where FV is future value, PV is the present value, i is the periodic interest rate and n is the number of periods. So applying to this particular problem we have:
a. if we deposit today 50, we are been asked to calculate the future value, so:
[tex]FV=50*(1+0.057)^{1}[/tex]
[tex]FV=52.85[/tex]
b.if we want to have 53 in one year, we are been asked to calculate a present value:
[tex]PV=53*(1+0.057)^{-1}[/tex]
[tex]PV=50.14[/tex]
c. is clear that is better to borrow to the friend because in one year he will pay more than bank
