Scheduled debt payments of $750 due seven months ago, $600 due two months ago, and $900...

Scheduled debt payments of $750 due seven months ago, $600 due two months ago, and $900 due in five months are to be settled by two equal replacements payments due now and three months from now. Determine the size of the equal replacement payments at 9% p.a. compounded monthly.

Solutions

Expert Solution

Equating Cash Flows today,

750(1 + 0.09/12)⁷ + 600(1 + 0.09/12)² + 900/(1 + 0.09/12)⁵ = X + X/(1 + 0.09/12)³

X = $1,145.85

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

A scheduled payment of $8,000 due in one year is to be replaced with two payments:...

A scheduled payment of $8,000 due in one year is to be replaced with two payments: the first due in 7 months and the second due in 22 months. Calculate the size of the two payments if the second payment is to be twice as large as the first payment, and money can earn 6% compounded monthly.

A debt of RM900 due in five months and another of RM1000 due in ten months...

A debt of RM900 due in five months and another of RM1000 due in ten months are to be settled by a single payment at the end of seven months. Find the size of this payment using a. The present as the focal date, b. The date of the settlement as the focal date Assuming the money is worth 8% per annum simple interest.

A debtor owing payments of $750 due today, $1,000 due in 2 years, and $1,250 due...

A debtor owing payments of $750 due today, $1,000 due in 2 years, and $1,250 due in 4 years requests a payout figure to settle all three obligations by means of a single economically equivalent payment 18 months from now. What is that amount, if the payee can earn 9.5% compounded semiannually? (Do not round your intermediate calculations and round your final answer to the nearest cent.)

Scheduled payments of $1400 due today and $1600 due with interest at 11.5% compounded annually in...

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.

Leopold owes $600 due in four months and $700 due in 6 months. What cash payment...

Leopold owes $600 due in four months and $700 due in 6 months. What cash payment would pay off both debt if the interest rate is 13.5% (Use six months as the focal point).

Find the amount borrowed if $900 is due at the end of 4 months when an...

Find the amount borrowed if $900 is due at the end of 4 months when an annual simple interest rate of 9% is used.

A debt must be settled in two years, through payments of 6000 dollars every two months...

A debt must be settled in two years, through payments of 6000 dollars every two months overdue. The debtor agrees with his creditor to restructure the debt liquidating the debt in 3 years and a half with equal monthly payments due. Calculate the value of the new payments, if the The effective interest rate is 13% per annum.

A debt of $3000 is due in 4 months and another $5000 is due in 9...

A debt of $3000 is due in 4 months and another $5000 is due in 9 months. Instead, it is agreed that a payment of $X, made in 3 months, followed by a payment of $4000 in 10 months, will fully pay off the loan. Using 9 months as the focal date, what is X if the simple interest rate on the loan is r = 10%?

Ali wishes to replace payments of $1050 due today and $1250 due in 22 months by...

Ali wishes to replace payments of $1050 due today and $1250 due in 22 months by a single equivalent payment 18 months from now. If money is worth 3.8% compounded monthly, what should that payment be? Interim calculations to 3 decimals, final answer rounded to the nearest cent. (Total: 9 marks)

A debt of $7000 due today is to be settled by three equal payments due 3...

A debt of $7000 due today is to be settled by three equal payments due 3 months from now, 15 months from now, and 27 months from now. What is the size of the equal payments at 11% compounded annually?

Subjects