In: Finance
Leah currently owes $12,000 to a friend who is charging her interest of 2.60% p.m. She is required to settle the loan with two equal payments, one today and the other in four months. Calculate the size of the payments using four months as the focal date
loan = 12000
rate = 2.6% pm
let us assume the payments to be x
and present value of paymnets shall be equal to 12000
12000= x + x/(1+0.026(4))
12000 = 2.104x/1.104
x = 12000*1.104/2.104 = 6296.57
so size of each payment is 6296.57