Your friend needs a loan now and is willing to pay you back $330 in 1 year and another $400 in 2 years. (i.e. you will receive both payments) How much are you willing to lend your friend now if you could otherwise earn an interest of 7% with the same level of risk?
a. $682.24
b. $730
c. $781.10
d. $657.79
e. $637.61