Asked by Fahad Hashmi on Apr 28, 2024
Verified
A loan is to be repaid by $1,000 in one year and $1,500 in three years. The borrower has asked to repay $1,000 in two years and a final payment in three years. If money can earn 8% compounded quarterly, what is the size of the final payment?
Compounded Quarterly
The process where interest is added to the principal sum of a deposit or loan every quarter, so that the added interest also earns interest from then on.
Final Payment
The last payment made to settle the balance of a financial obligation, such as a loan or mortgage.
Borrower
An individual, company, or institution that receives funds from a lender under the condition of paying back the borrowed amount plus interest.
- Acquire knowledge and execute the concept of time value of money in diverse situations.
- Estimate the immediate and future worth of individual and plural cash streams.
- Employ compound interest equations to ascertain the accumulation of interest on a quarterly, semi-annual, and annual basis.
Verified Answer
KF
Learning Objectives
- Acquire knowledge and execute the concept of time value of money in diverse situations.
- Estimate the immediate and future worth of individual and plural cash streams.
- Employ compound interest equations to ascertain the accumulation of interest on a quarterly, semi-annual, and annual basis.