Asked by Alysha Brown on Jul 14, 2024
Verified
Two payments of $5,000 are scheduled six months and three years from now. They are to be replaced by a payment of $3,000 in two years, a second payment in 42 months, and a third payment, twice as large as the second, in five years. What should the last two payments be if money is worth 9% compounded semi-annually?
Compounded Semi-Annually
Involves calculating the addition of interest to the principal sum of a loan or deposit on a half-yearly basis, incrementally increasing the amount earned or owed.
Payment Stream
A series of payments made over a period of time, often in the context of loans or annuities.
- Acquire knowledge on the principles of time value of money essential for computing equivalent payment streams and outcomes of investments.
- Analyze the monetary ramifications of deferring disbursements or restructuring payment timelines.
Verified Answer
OS
Olateju ShoniregunJul 21, 2024
Final Answer :
second payment = $3,019.99 and third payment = $6,039.98
Learning Objectives
- Acquire knowledge on the principles of time value of money essential for computing equivalent payment streams and outcomes of investments.
- Analyze the monetary ramifications of deferring disbursements or restructuring payment timelines.