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majarm majarm
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Posts: 406
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A year ago
Janice owes two debt payments—a payment of $6700 due in twelve months and a payment of $8750 due in twenty-one months. If Janice makes a payment of $7000 now, when should she make a second payment of $7900 if money is worth 11.5% compounded semi-annually?
Textbook 

Contemporary Business Mathematics with Canadian Applications


Edition: 11th
Authors:
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josanjosan
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Posts: 354
A year ago
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Let the focal date be now.
Today's balance 6700.00(1.0575)-2 + 8750.00(1.0575)-3.5 - 7000.00
6700.00(.8942094) + 8750.00(.822278) - 7000.00
5991.20 + 7194.93 - 7000.00
PV = 6186.13 owing today , FV = 7900
n =   =   =   = 4.37423
The payment of $7900.00 should be made in 4.37423 × 6 = 26.245 months (2.19 years) from now.

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