Question 3:
Consider a $600 loan to the Catholic Church that will be paid back
without interest (the Church does not believe in usury) in two
equal installments of $300, the first to be received at the end
of one year and the second at the end of two years. The person
who made this loan is strapped for cash and wants to sell it to
you. How much is it worth, assuming that the market interest
rate on virtually risk-free securities is 5 percent?
1. $600.
2. $558.
3. Nothing because the loan doesn't pay interest.
Choose the correct option?