An Assignable Loan Contract Executed Three Months Ago Requires Two

question 116

Short Answer

An assignable loan contract executed three months ago requires two payments to be paid five and ten months after the contract date. Each payment consists of a principal portion of $1,800 plus interest at 5% on $1,800 from the date of the contract. The payee is offering to sell the contract to a finance company in order to raise cash. If the finance company requires a return of 10% simple interest, what price will it be prepared to pay today for the contract?

---

Definitions:

Mikhail Gorbachev

A significant political figure known for his role in reforming the Soviet Union during the 1980s through policies like glasnost and perestroika.

Communist System

A political and economic ideology aiming for a classless society where all property is publicly owned and each person works and is paid according to their abilities and needs.

State-Owned Enterprises

Businesses or entities that are owned and operated by a government.

Mikhail Gorbachev

The last leader of the Soviet Union, known for his policies of glasnost (openness) and perestroika (restructuring).