Patrice Defaulted on Payments of $1,000 Due One Year Ago

question 153

Short Answer

Patrice defaulted on payments of $1,000 due one year ago and $1,500 due six months ago. A Small Claims Court orders her to make three payments-$800 one month from now, $900 four months from now, and a third payment seven months from now. The third payment is to be determined so that the creditor will end up in the same economic position as if the original payments had been made on time. The court set the fair rate of return at 4.2% compounded monthly. What should the third payment be?

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