Payments of $657 and $1000 due 2 years ago and today respectively are to be replaced by two $1000 payments. If the first of the two $1000 payments is due in one year, and the interest rate is 3.6% compounded monthly, then to the nearest month, in how many months is the second $1000 payment due? Use 1 year from today as vour focal dato

Payments of $657 and $1000 due 2 years ago and today respectively are to be replaced by two $1000 payments. If the first of the two $1000 payments is due in one year, and the interest rate is 3.6% compounded monthly, then to the nearest month, in how many months is the second $1000 payment due? Use 1 year from today as vour focal dato

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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Concept explainers

Mortgages

A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.

Mortgage

The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.

Question

Payments of $657 and $1000 due 2 years
ago and today respectively are to be
replaced by two $1000 payments. If the first
of the two $1000 payments is due in one
year, and the interest rate is 3.6%
compounded monthly, then to the nearest
month, in how many months is the second
$1000 payment due? Use 1 year from today
as vour focal dato

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