Inc. as part o me company wh is worth 3.47%

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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Caitlin was supposed to make a payment of $3,250 in 1 year and another payment fo
$1,100 in 7 years to Maroon Inc. as part of a payment plan. Instead, she is trying to
reach an agreement with the company where she would settle both payments in 5
years. Assume that money is worth 3.47% compounded semi-annually.
a. Calculate the equivalent value of the $3,250 payment and the $1,100 payment
today.
↑
Transcribed Image Text:Caitlin was supposed to make a payment of $3,250 in 1 year and another payment fo $1,100 in 7 years to Maroon Inc. as part of a payment plan. Instead, she is trying to reach an agreement with the company where she would settle both payments in 5 years. Assume that money is worth 3.47% compounded semi-annually. a. Calculate the equivalent value of the $3,250 payment and the $1,100 payment today. ↑
b. Calculate the size of the payment required in 5 years to settle the amount.
Round to the nearest cent
Transcribed Image Text:b. Calculate the size of the payment required in 5 years to settle the amount. Round to the nearest cent
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