Your sister borrowed a loan from her friend a while ago, and it is to be repaid by $350 today and by $50 in three months. However, instead of having your sister to repay these payments at two periods, she and her friend agreed that she will make a single payment one month from today. Your sister and her friend both need to determine the size of the single equivalent payment, $X, on the agreed focal date one month from today at an interest rate of 5% p. a. Answer the following question: If the focal date is one month from today, what is the focal date value of $350? Express the answer with at least 6 decimal places. There is no need to enter symbols such as $ sign or comma. Hint: consider this case, if your sister misses to paythe first $350 loan payment today, her friend (the lender) would not be willing to accept only $350 in one month since interest should be included if the loan repayment is to be made one month later. Therefore, she needs to find the equivalent value of $350 at month 1. Since month 1 is a future date, the equivalent value of $350 at month 1 must be a future value. In this case, she could find the future value by applying the maturity value formula S = P(1+rt). %3D Answer:
Your sister borrowed a loan from her friend a while ago, and it is to be repaid by $350 today and by $50 in three months. However, instead of having your sister to repay these payments at two periods, she and her friend agreed that she will make a single payment one month from today. Your sister and her friend both need to determine the size of the single equivalent payment, $X, on the agreed focal date one month from today at an interest rate of 5% p. a. Answer the following question: If the focal date is one month from today, what is the focal date value of $350? Express the answer with at least 6 decimal places. There is no need to enter symbols such as $ sign or comma. Hint: consider this case, if your sister misses to paythe first $350 loan payment today, her friend (the lender) would not be willing to accept only $350 in one month since interest should be included if the loan repayment is to be made one month later. Therefore, she needs to find the equivalent value of $350 at month 1. Since month 1 is a future date, the equivalent value of $350 at month 1 must be a future value. In this case, she could find the future value by applying the maturity value formula S = P(1+rt). %3D Answer:
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
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Transcribed Image Text:Your sister borrowed a loan from her friend a while ago, and it is to be
repaid by $350 today and by $50 in three months. However, instead of
having your sister to repay these payments at two periods, she and her
friend agreed that she will make a single payment one month from
today. Your sister and her friend both need to determine the size of
the single equivalent payment, $X, on the agreed focal date one month
from today at an interest rate of 5% p. a. Answer the following
question:
If the focal date is one month from today, what is the focal date value
of $350? Express the answer with at least 6 decimal places. There is
no need to enter symbols such as $ sign or comma.
Hint: consider this case, if your sister misses to paythe first $350 loan
payment today, her friend (the lender) would not be willing to accept
only $350 in one month since interest should be included if the loan
repayment is to be made one month later. Therefore, she needs to find
the equivalent value of $350 at month 1. Since month 1 is a future
date, the equivalent value of $350 at month 1 must be a future value.
In this case, she could find the future value by applying the maturity
value formula S = P(1+rt).
Answer:
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