Question

Question 1. .Scheduled payments of $400 due now and $700 due in five months are to be settled by a payment of $500 in three months and a final payment in eight months. Determine the amount of the final payment at 6% p.a., using eight months from now as the focal date.

Question 2. Two amounts owing from the past were to be paid today. One debt was $620 from one year ago and the other was $925 from six months ago. Determine the single payment today that would fully repay the debts. Allow for simple interest at 12% p.a.

Answer #1

ANSWER 1.

To solve this problem we have to set the originally scheduled
payments equal to the replacement payments and **$x i.e the
final payment**. Since the focal point occurs in the future,
we use the future value formula for each payment.

$400[1+0.06(8/12)] + $700[1+0.06(3/12)] = $500[1+0.07(5/12)] + $x

$416 + $710.5 = $514.58 + $x

**$x = $611.92**

ANSWER 2.

we need to calculate the future value of the debt due before.

$620(1+0.12*1) + $925(1+0.12*0.5)

$694.4 + $980.5

**=$ 1674.9**

Three payments are scheduled as follows: $1100 is due today,
$900 is due in five months and $1500 is due in eight months. The
three payments are to be replaced by a single payment due 9 months
from now. If money can earn 5.9%, what should the payment be? Use 9
months from now as the focal date. Round to the nearest cent.

Scheduled debt payments of $1500.00 due seven months ago,
$1200.00 due two months ago, and $1800.00 due in five months are to
be settled by two equal payments now and three months from now
respectively. Determine the size of the equal replacement payments
at 9% p.a. compounded monthly.

2. Scheduled debt payments of $1500.00 due seven months ago,
$1200.00 due two months ago, and $1800.00 due in five months are to
be settled by two equal payments now and three months from now
respectively. Determine the size of the equal replacement payments
at 9% p.a. compounded monthly. (15 points)

Mr. Barrow have loan payments of $400 due 95 days ago and $700
due today are to be repaid by a payment of $600 thirty days from
today and the balance in 125 days. If money is worth 6% and the
agreed focal date is 125 days from today, how much is Mr. Barrow’s
final payment?
RATE 6%

Payments of $700 due three months ago and $1000 six months from
now are to be replaced by one equivalent payment four months from
now. What is the size of this payment if money can earn 7%?

Debts of $1400.00, $2450.00 are due in one year and thirty
months from now respectively. Replacement payments of $2500 in six
months and a final payment in 32 months. Determine the final
payment that would settle the debts if interest is 8% p.a.
compounded quarterly.
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two scheduled debt payments of $712 each are due two months and
nine months from now respectively. If interest at 6% is allowed,
what single payment today is required to settle the two scheduled
payments?

Scheduled payments of $1400 due today and $1600 due with
interest at 11.5% compounded annually in five years are to be
replaced by two equal payments. The first replacement payment is
due in 18 months and the second payment is due in 4 years.
Determine the size of the two replacement payments if interest is
11% compounded quarterly and the focal date is 18 months from
now.

You are responsible to pay back the following: $400 due today,
$500 due in five months, and $618 due in one year. You are given
the option: instead of making the above 3 payments, you can pay the
same amount as a single payment 9 months from now. Assuming a 12%
per annum (p.a) interest rate, how much will the single payment
be?

Scheduled payments of 1288$ due
two years ago and 708$ due in six years are to be replace by two
equal payments. The first replacement payment is due in one year
and the second payment is due in nine years. Determine the size of
the two replacement payments if interest is 7.5% compounded monthly
and the focal date is one year from now.

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