Question

You owe $1,750 at 6 months and $2,000 at 15 months. You will settle BOTH debts at 15 months using 4% (Q). Round each answer to the nearest penny.

Answer 1

You owe $1,750 at 6 months and $2,000 at 15 months. You will settle BOTH debts at 15 months using 4% (Q). Round each answer to the nearest penny.

- Amount owe in 6 months = $1750

- Amount owe in 15 months = $2000

Calculating the amount to be settle in 15 months:-

where, Amount6 =  Amount owe in 6 months = $1750

r = Periodic Interest rate = 4%/4 = 1% (Quarterly compounding)

n = no of periods = (15 months- 6 months)/3 = 3

Amount15 = Amount owe in 15 months = $2000

Settlement Amount = $3803.03

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