Q20 An obligation of $500 falls due at the end of 3 years. Find an equivalent debt at the end of a. 3 months b. 3 years and 9 months Show that dated value at t=0 of the three sums i.e. $500 at 3 years, answer of part a and b are equal at t=0

Q20 An obligation of $500 falls due at the end of 3 years. Find an equivalent debt at the end of a. 3 months b. 3 years and 9 months Show that dated value at t=0 of the three sums i.e. $500 at 3 years, answer of part a and b are equal at t=0

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA3: Time Value Of Money

Section: Chapter Questions

Problem 8CE

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Concept explainers

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

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Q20 An obligation of $500 falls due at the end of 3 years.
Find an equivalent debt at the end of
a. 3 months
b. 3 years and 9 months
Show that dated value at t=0 of the three sums i.e. $500 at
3 years, answer of part a and b are equal at t=0

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