Debt payments of $800.00 due now and $1400.00 due in five months are to be repaid by a payment of $1000.00 in three months and a final payment in eight months. Calculate the size of the final payment if interest is 6%. Select one: Oa. $1228 Ob. $1100 c. $2238 d. $1450

Debt payments of $800.00 due now and $1400.00 due in five months are to be repaid by a payment of $1000.00 in three months and a final payment in eight months. Calculate the size of the final payment if interest is 6%. Select one: Oa. $1228 Ob. $1100 c. $2238 d. $1450

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section4.17: Amortized Loans

Problem 1ST

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Concept explainers

Amortized Loans

The term "amortization" refers to spreading the value of a loan or a debt over a series of regular payments or installments comprising of both the principal and interest amount. It generally involves the process where in the value of a loan or an intangible asset is written down over its maturity period.

Question

Debt payments of $800.00 due now and $1400.00 due in five months are to be repaid by a payment of $1000.00 in three
months and a final payment in eight months. Calculate the size of the final payment if interest is 6%.
Select one:
a. $1228
b. $1100
c. $2238
d. $1450
O
O

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