Mark and Ellot are friends. Mark wants to buy a new computer but does not have the money right now. Mark will pay Elliot $2,000 in five years if Mark will give him $1600 today. Elliot figures that there's an interest rate of 6% if he were to put the money in a bank instead of lending it to Mark. Assume there is no risk not paying the $2,000 when he says he will. Should he go ahead with the loan.

Borrowing money from friends is always a chancy proposition. One of the most quick ways to lose a friend.

However, if we remove the friend part out of the equation and just assume a business deal, then a 25% return over 5 years is a decent deal.