Question

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?

Answer #1

present value = future value / (1 + interest rate)^{n},
where n = time in years

future value = present value * (1 + interest rate)^{n},
where n = time in years

Value of single payment = future value of $400 after 9 months + future value of $500 after 9 months + present value of $618 after 9 months

Value of single payment = ($400 * (1 + 12%)^{9/12}) +
($500 * (1 + 12%)^{4/12}) + ($618 / (1 +
12%)^{3/12})

Value of single payment = $435.49 + $519.25 + $600.74

Value of single payment = $1,555.47

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...

You are owed payments of $800 due today, $1,000 due in five
months and $1,200 due in one year. You have been approached to
accept a single payment seven months from now. What amount should
you accept in seven months in place of the three payments? Use an
interest rate of 9% per annum and 7 months from now as the focal
date.

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.

Find the equivalent payment that needs to be made in 9 months
from today instead of the following three payments.
A $350 due today, a $450 due in 12 months from today and a
$300 due in 18 months from today. Interest rate is 2.5% p.a.

How much would you pay today for an asset that pays five
payments of $100 each year for five years, starting eight years
from now, assuming the interest rate is 3%?
$372.37
$457.97
$361.53
$500.00

You
borrow $500 from a family member and agree to pay it back in six
months. Because you are part of the family, you are only being
charged simple interest at the rate of 6% per month. How much
(Principal + interest) will you owe after six months?

You bought a car and have to pay $500 monthly, for 36 months.
How much did the car cost? The monthly interest rate is 1.7%. a.
Assuming you first payment is at the end of this month b. Assuming
your first payment is right away c. Assuming your first payment is
in 12 months

Annuity due pays $400 every 6 months for 10 years starting
today. Assume you will purchase with returns 6% annually, what is
the most you'd be willing to pay?

Strapped for cash, your neighbor makes you the following offer. He
will pay you back the money he borrows today over the next 13
years. He will make yearly payments with the first payment being
for $1831 at the end of this year. The payments will grow by 16%
every year thereafter. If the appropriate discount rate is 9%, how
much would you be willing to lend your neighbor today?

Today, you borrowed $20,000 and have agreed to pay off the loan
by making $500 weekly payments. Assume the effective weekly
interest rate is 0.2%. If you were preparing an amortization
schedule, what would be the ending balance after your first payment
(i.e. at the end of the first week)?

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 3 minutes ago

asked 8 minutes ago

asked 18 minutes ago

asked 35 minutes ago

asked 35 minutes ago

asked 36 minutes ago

asked 39 minutes ago

asked 42 minutes ago

asked 45 minutes ago

asked 49 minutes ago

asked 56 minutes ago

asked 1 hour ago