Question

A debt payment of $5,500 is due in 27 months. If money is
worth 8.4% p.a. compounded quarterly, what is the equivalent
payment? Now? 15 months? 27 months? 36 months?

Answer 1

Step-by-step explanation:

A=P(1+0.084) ^n;

=5500(1

Answer 2

The payment now is $4561.7450, 15 months later $5061.28, 27 months later $5500.00595 and 36 months later $5853.83.

Interest rate = 8.4/4 =2.1% = 0.021 every 3 months

The debt of $5500 is due in 27 months.

What is the formula to find compound interest?

The formula to find the compound interest is  $FV=PV(1+r)^{n}$.

Now, $PV=FV(1+r)^{-n}$.

The payment now:

5500*(1.021)^-9 = $4561.7450

So if $5500 is due in 27 months its current value is $4561.7450.

( b) 15 months from now? 5 quarters  

FV(15months)= 4561.75*1.021^5

4561.75*1.021^5 = $5061.28

(c) 27 months from now? 9 quarters

FV(15 months)= $5500  that was given in the question

Verification:

FV(27months)=4561.75*1.021^9

4561.75*1.021^9 = $5500.00595

(d) 36 months from now?   12 quarters

FV(36months)=4561.75*1.021^12

4561.75*1.021^12 = $5853.83

Therefore, the payment now is $4561.7450, 15 months later $5061.28, 27 months later $5500.00595 and 36 months later $5853.83.

To learn more about compound interest visit:

https://brainly.com/question/14295570.

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