A payment of $3,530 is due in 45 days and another payment of $4,790 is due in 280 days. Calculate the single equivalent payment to be made in 80 days to settle the two payments if money earns 6.05% p.a. (Hint: use 80 days from now as the focal date.) $

A payment of $3,530 is due in 45 days and another payment of $4,790 is due in 280 days. Calculate the single equivalent payment to be made in 80 days to settle the two payments if money earns 6.05% p.a. (Hint: use 80 days from now as the focal date.) $

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.

Question

A payment of $3,530 is due in 45 days and another payment of $4,790 is due in 280 days.
Calculate the single equivalent payment to be made in 80 days to settle the two payments if
money earns 6.05% p.a. (Hint: use 80 days from now as the focal date.) $

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Follow-up Question

A payment of $1,930 is due in 55 days and another payment of $3,600 is due in 300 days.
Calculate the single equivalent payment to be made in 55 days to settle the two payments if
money earns 8.59% p.a. (Hint: use 55 days from now as the focal date.) $

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