5. * Assume that somebody has to pay £2000 in three years' time and £3000 in seven years' time. They want to pay off both debts by a single payment in six years' time. Assuming an interest rate of 8% p.a., how much do they have to pay?

5. * Assume that somebody has to pay £2000 in three years' time and £3000 in seven years' time. They want to pay off both debts by a single payment in six years' time. Assuming an interest rate of 8% p.a., how much do they have to pay?

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section4.17: Amortized Loans

Problem 1ST

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can you please provide explanations

5. * Assume that somebody has to pay £2000 in three years' time and £3000 in seven years' time. They
want to pay off both debts by a single payment in six years' time. Assuming an interest rate of 8% p.a.,
how much do they have to pay?

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