Question

You plan to borrow $ 4 comma 000 from a bank. In exchange for $ 4 comma 000 ​today, you promise to pay $ 4 comma 160 in one year. What does the cash flow timeline look like from your​ perspective? What does it look like from the​ bank's perspective?

Answer 1

Please check the attached image for the diagram

Step-by-step explanation:

I would be borrowing $4000 from the bank. I would be $4,000 richer and the bank would have $4000 less.

In one year, I would be paying the bank $4160. So I would have $4160 less and the bank would be $4160 richer.

A negative sign indicates cash outflow and a positive sign indicates a cash inflow.

I hope my answer helps you.