Fred owes $5,000 due in three years and $8,000 due in 11 years. Unfortunately, Fred is unable to meet the $10,000 obligation. By mutual consent with the lender, Fred is allowed to pay off both loans after eight years at 9% simple interest. (eight years is the focal date.) How much does Fred pay?
Fred owes $5,000 due in three years and $8,000 due in 11 years. Unfortunately, Fred is unable to meet the $10,000 obligation. By mutual consent with the lender, Fred is allowed to pay off both loans after eight years at 9% simple interest. (eight years is the focal date.) How much does Fred pay?
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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Transcribed Image Text:Fred owes $5,000 due in three
years and $8,000 due in 11 years.
Unfortunately, Fred is unable to
meet the $10,000 obligation. By
mutual consent with the lender,
Fred is allowed to pay off both
loans after eight years at 9%
simple interest. (eight years is the
focal date.) How much does Fred
pay?
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