. M acquired a small lot in a subdivision, paying P20,000 down and pledge to pay P1,500 every 3 months for the next 10 years. The seller figured interest at 12% compounded quarterly. Show the cash flow diagram. a. What was the cash price of the lot? b. If M missed the first 12 payments, what must he pay at the time the 13th is due to bring himself up to date? c. After making 8 payments, M wished to discharge his remaining indebtedness by a single payment at the time when 9th regular payment was due, what must he pay in addition to the regular payment then due? d. If M missed the first 10 payments, what must he pay when the 11th payment is due to discharge his entire indebtedness?
. M acquired a small lot in a subdivision, paying P20,000 down and pledge to pay P1,500 every 3 months for the next 10 years. The seller figured interest at 12% compounded quarterly. Show the cash flow diagram. a. What was the cash price of the lot? b. If M missed the first 12 payments, what must he pay at the time the 13th is due to bring himself up to date? c. After making 8 payments, M wished to discharge his remaining indebtedness by a single payment at the time when 9th regular payment was due, what must he pay in addition to the regular payment then due? d. If M missed the first 10 payments, what must he pay when the 11th payment is due to discharge his entire indebtedness?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Please provide a written step-by-step solution to the problem. Do not use any software in answering the problem so that I could understand how it is solved. Please provide a cash flow diagram or table. Thank you
Transcribed Image Text:3. M acquired a small lot in a subdivision, paying P20,000 down and
pledge to pay P1,500 every 3 months for the next 10 years. The seller
figured interest at 12% compounded quarterly. Show the cash flow
diagram.
a. What was the cash price of the lot?
b. If M missed the first 12 payments, what must he pay at the time
the 13th is due to bring himself up to date?
c. After making 8 payments, M wished to discharge his remaining
indebtedness by a single payment at the time when 9th regular
payment was due, what must he pay in addition to the regular
payment then due?
d. If M missed the first 10 payments, what must he pay when the
11th payment is due to discharge his entire indebtedness?
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Given:
VIEWa. Calculation of Cash Price of the Lot:
VIEWb. Calculation of Amount to be paid when 13th Payment is due:
VIEWc. Calculation of Additional Amount need to pay at the time of 9th payment to pay the debt in full:
VIEWd. Calculation of Amount need to pay to discharge the complete debt at 11 payment:
VIEW
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