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.
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
Section: Chapter Questions
Problem 1PS
Related questions
Question
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.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 4 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education