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Home Q & A Board Science-Related Homework Help Mathematics
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xiaoyu000 xiaoyu000
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10 months ago
Three years ago, Andrea loaned $2000 to Heather. The principal with interest at 9% compounded semiannually is to be repaid four years from the date of the loan. Eighteen months ago, Heather borrowed another $1000 for 3½ years at 8% compounded semiannually. Heather is now proposing to settle both debts with two equal payments to be made one and three years from now. What should the payments be if money now earns 6% compounded quarterly?
Textbook 
Business Mathematics in Canada

Business Mathematics in Canada


Edition: 11th
Authors:
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mhmoud123mhmoud123
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10 months ago
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10 months ago
Help! The answer is missing an explanation...
Post Merge: 10 months ago

Explanation to this question is missing
Anonymous
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7 months ago
Help! The answer is missing an explanation...
Anonymous
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7 months ago
Help! The answer is missing an explanation...
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7 months ago
Help! The answer is missing an explanation...
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#6
Educator
7 months ago Edited: 7 months ago, bio_man
Find the future value of $2000 at present from 3 years ago today:

FV = 2000(1+0.09/2)^(3*2)
FV = 2604.5202497

Find the future value of $1000 at present from 18 months ago today:

FV = 1000(1+0.08/2)^(1.5*2)
FV= 1124.864

The sum of these two FV values is the present owing as for today:

PV = 2604.5202497 + 1124.864
PV = 3729.3842497

To settle the debt, we want to make two equal payments in the future, 1 year and 3 years from today's owing at a new rate of 6% compounded quarterly.

PV = FV at year 1 + FV at year 2

3729.38 = FV(1+0.06/4)^-4 + FV(1+0.06/4)^-12

Solve for FV:

FV = 2096.83989702

The answer I am getting is 2096.84

What did I do wrong? Perhaps the poster is wrong?

I used this video to help me:
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