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Mathematics Clinic => Grade 11 and 12 Mathematics => Topic started by: WhattoUnderstand on Jun 6, 2019

Title: A loan of $8000.00 taken out two years ago is to be repaid by three equal installments due now, ...
Post by: WhattoUnderstand on Jun 6, 2019

Question 1

Debt payments of $1400.00 due today, $5100.00 due in twenty-one months, and $1900.00 due in 4.5 years are to be combined into a single payment due three years from now. What is the size of the single payment if interest is 8.04% p.a. compounded quarterly?

Question 2

A loan of $8000.00 taken out two years ago is to be repaid by three equal installments due now, three years from now, and six years from now respectively. What is the size of the equal installments if interest on the debt is 7.32% p.a. compounded monthly?

Title: A loan of $8000.00 taken out two years ago is to be repaid by three equal installments due now, ...
Post by: meganlapinski on Jun 6, 2019

Answer 1

Let the single payment be $x and the focal date be 3 years from now.
x = 1400.00(1.0201)12 + 5100.00(1.0201)5 + 1900.00(1.0201)-6
x = 1400.00(1.2697346) + 5100.00(1.1046221) + 1900.00(.8874492)
x = 1777.63 + 5633.57 + 1686.15
x = $9097.35

Answer 2

Let the size of the equal payments be $x and the focal date be now.
8000.00(1.0061)24 = x + x(1.0061)-36 + x(1.0061)-72
8000.00(1.1571444) = x + .8033756x + .64541235x
9257.16 = 2.44878795x
$3780.30 = x

Title: Re: A loan of $8000.00 taken out two years ago is to be repaid by three equal installments due now,
Post by: A00074291 on Dec 11, 2019

Thank you