Eight months ago, Louise agreed to pay Thelma $750 and $950, 6 and 12 months, respectively, from the date of the agreement. With each payment, Louise agreed to pay interest on the respective principal amounts at the rate of 6.5% from the date of the agree-ment. Louise failed to make the first payment and now wishes to settle her obligations with a single payment four months from now. What payment should Thelma be willing to accept if money can earn 4.75%? r= rate of interest p= present value s= future value t= time
Eight months ago, Louise agreed to pay Thelma $750 and $950, 6 and 12 months, respectively, from the date of the agreement. With each payment, Louise agreed to pay interest on the respective principal amounts at the rate of 6.5% from the date of the agree-ment. Louise failed to make the first payment and now wishes to settle her obligations with a single payment four months from now. What payment should Thelma be willing to accept if money can earn 4.75%? r= rate of interest p= present value s= future value t= time
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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Eight months ago, Louise agreed to pay Thelma $750 and $950, 6 and 12 months, respectively, from the date of the agreement. With each payment, Louise agreed to pay interest on the respective principal amounts at the rate of 6.5% from the date of the agree-ment. Louise failed to make the first payment and now wishes to settle her obligations with a single payment four months from now. What payment should Thelma be willing to accept if money can earn 4.75%?
r= rate of interest
p=
s=
t= time
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