Kina made a loan under ABC Inc. amounting to P120,000 pesos on January 1, 2015. The following year, he deposited P60,000 to partially pay his loan. On January 1, 2017, Kina borrowed P40,000 from the same loaning institution, on top of his existing balance. If Kina plans to make two payments on January 1, 2020 and January 1, 2021 to settle his loan with ABC Inc., how much should the two payments be? Assume that the amount of the payment to be made on January 1, 2021 is twice the payment to be made on January 1, 2020 and that both loans have an interest rate of 10% compounded quarterly. Construct a cash flow diagram to support your solution.

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
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Kina made a loan under ABC Inc. amounting to P120,000 pesos on January 1, 2015. The following year, he deposited P60,000 to partially pay his loan. On January 1, 2017, Kina borrowed P40,000 from the same loaning institution, on top of his existing balance. If Kina plans to make two payments on January 1, 2020 and January 1, 2021 to settle his loan with ABC Inc., how much should the two payments be? Assume that the amount of the payment to be made on January 1, 2021 is twice the payment to be made on January 1, 2020 and that both loans have an interest rate of 10% compounded quarterly. Construct a cash flow diagram to support your solution.

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