Janice Owes Two Debt Payments-A Payment of $6700 Due in Twelve

question 72

Essay

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?

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Definitions:

Inventories

Assets consisting of goods available for sale to customers in the ordinary course of business.

Common Stock

A form of corporate equity ownership, a type of security representing ownership interests in a corporation.

EBITDA Coverage

A ratio that measures a company’s ability to pay off its operational and debt-related expenses with its earnings before interest, taxes, depreciation, and amortization.

Interest Rate

The amount charged by a lender to a borrower for the use of assets, expressed as a percentage of the principal.