Payments of $1430 Due One Year Ago and $1175 Due

question 50

Essay

Payments of $1430 due one year ago and $1175 due with interest of 6% in nine months are to be settled by three equal payments due today, seven months from now, and one year from now at 7.5%. Determine the size of the equal payments if the agreed focal date is one year from today.

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Definitions:

Equity Method

An accounting technique used by a company to record its investment in another company when it has significant influence but not full control over that company.

Net Income

The total profit of a company after all expenses, including taxes and costs, have been deducted from total revenue.

Equity Method

The equity method is an accounting technique used to assess the investments in other companies, where the investment is recorded at original cost and adjusted according to the investor’s share of the investee's profit or loss.