A debtor must pay R1000 after 5 years, R2000 after 10 years, and R3000 after 15 years. He proposes paying R6000 after 12 years to settle these debts. Assuming the effective interest rate to be 5% p.a. for the first 5 years, 4% p.a. for the second 5 years and 4% p.a. for the third 5 years, find how much the debtor stands to gain or lose by the proposal as at the date of settlement.
A debtor must pay R1000 after 5 years, R2000 after 10 years, and R3000 after 15 years. He proposes paying R6000 after 12 years to settle these debts. Assuming the effective interest rate to be 5% p.a. for the first 5 years, 4% p.a. for the second 5 years and 4% p.a. for the third 5 years, find how much the debtor stands to gain or lose by the proposal as at the date of settlement.
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
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A debtor must pay R1000 after 5 years, R2000 after 10 years, and R3000 after 15
years. He proposes paying R6000 after 12 years to settle these debts.
Assuming the effective interest rate to be 5% p.a. for the first 5 years, 4%
p.a. for the second 5 years and 4% p.a. for the third 5 years, find how much the
debtor stands to gain or lose by the proposal as at the date of settlement.
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