You plan to borrow $1,000 from a bank. In exchange for $1,000 today, you promise

Question

You plan to borrow $1,000 from a bank. In exchange for $1,000 today, you promise to pay $1,050 in one year What does the cash flow timeline look like from your perspective? What does it look like from the bank's What does the cash flow timeline look like from your perspective? (Select the best choice below.) OA. $1,050 $1,000 O8. 1,050 -$1,000 $1,000$1,050 O D. 1,000 $1,050 What does it look like from the bank's perspective? (Select the best choice below) OA. 1,000$1,050 . $1,050 $1,000 Click to select your answer Save for Later

Explanation / Answer

+ve number is assumed to be an inflow and -ve number is assumed to be an outflow

Since you are receiving $1000 as on today it will be considered as an inflow in your hands and an outflow from the hands of the bank.

Now after 1 year when you return the money with interest i.e.$1050 it will be considered as an outflow from your hands and an inflow in the hands of the bank.

Thus the correct answer to the first question is option D

The correct answer to the second question is the option C

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