Question

A debt of $7042.73 is repaid by payments of $1442.15 in 3 ​months, ​$1103.94 in 13 months, and a final payment in 26 months. If interest was 5% compounded annually, what was the amount of the final​ payment? (Round to the nearest cent)

Answer 1

Total debt $ 7042.73

$ 1442.15 in 3 months

$ 1103.94 in 13 months

Remaining $ 4496.64 in 26 months

1. For $ 1442.15 in 3months

A = P( 1 + r/n ) nt

A= 1442.15 ( 1 + 0.05 / 3 ) 3*1

= 1442.15 ( 1.0519)

= $ 1516.

2. For $1103.94 in 13 months

A = 1103.94 ( 1+0.05/13 ) 13*1

= 1103.94 ( 3.4596 )

= $3819

3. Remaining $ 4496.64 in 26 months

A = 4496.64 ( 1+0.05/26 ) 26*1

= 4496.64 ( 1.0506)

= $ 4724.17

The final amount payment made is $ 10,059 ( $ 1516 + $ 3819 + $ 4724 )