A construction company buys a tractor, paying $10,000 in cash and agreeing to pay $5,000 every six months for three years. During the first six months of operation, the company receives an unexpected court settlement from a totally different case of $25,000. The company had not yet made the first semiannual installment for the tractor. When should the company make a payment of $25,000 to discharge its obligation for the purchase in a lump sum settlement, if the interest rate is 12% compounded semiannually?
A construction company buys a tractor, paying $10,000 in cash and agreeing to pay $5,000 every six months for three years. During the first six months of operation, the company receives an unexpected court settlement from a totally different case of $25,000. The company had not yet made the first semiannual installment for the tractor. When should the company make a payment of $25,000 to discharge its obligation for the purchase in a lump sum settlement, if the interest rate is 12% compounded semiannually?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:*Without using excel*
A construction company buys a tractor,
paying $10,000 in cash and agreeing to pay
$5,000 every six months for three years.
During the first six months of operation, the
company receives an unexpected court
settlement from a totally different case of
$25,000. The company had not yet made the
first semiannual installment for the tractor.
When should the company make a payment
of $25,000 to discharge its obligation for the
purchase in a lump sum settlement, if the
interest rate is 12% compounded
semiannually?
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