Asked by Harun Abdullahi on May 01, 2024
Verified
Ninety days ago Stella signed an agreement with Manon requiring her to make three payments of $400 plus interest 90, 150, and 210 days, respectively, from the date of the agreement. Each payment was to include interest on the $400 principal at the rate of 13.5% from the date of the agreement. Stella now wants Ed to renegotiate the agreement and accept a single payment 30 days from now, instead of the three scheduled payments. What payment should Manon require in the new agreement if money is worth 8.5%?
Renegotiate
The process of revising the terms of an existing agreement, typically to adjust for new circumstances or to gain more favorable terms.
Scheduled Payments
Payments set to be made at specific times, typically as part of a repayment plan for a loan.
Equivalent
Items or values that are equal in function, value, or meaning.
- Use the theory of equivalent value to examine various payment plans.
- Examine and select from a range of offers or payment schedules according to their financial value.
Verified Answer
ZK
Learning Objectives
- Use the theory of equivalent value to examine various payment plans.
- Examine and select from a range of offers or payment schedules according to their financial value.