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Good day Mr Moffat
I used a different approach,
I calculated the effective discount rate as in the lecture
1+R = (1+0,5/99,5)^6 which equals 3%
From here I reached the same conclusion, we should not borrow at 4,5% to earn only 3% from the discount. If the discount rate was higher than the borrowing I would advise to take the discount.
Would this approach be valid?
Thank youin advance.
Yes – that would be valid 🙂
Thank you so much.
You are welcome 🙂