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Suppose That You Have $100 Today and Expect to Receive

Question 8

Multiple Choice

Suppose that you have $100 today and expect to receive $100 one year from today. Your money market account pays an annual interest rate of 25%, and you may borrow money at that interest rate. Suppose that you borrow $60 and spend $160 today. After you repay your loan one year from today, how much money will you have available for consumption one year from today?


A) $0
B) $25
C) $50
D) $75

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