Scheduled Payments of $3,000 Due Today and $2,000 Due in 15

question 179

Short Answer

Scheduled payments of $3,000 due today and $2,000 due in 15 months are to be replaced by two payments-$1,500 due in 15 months and a second payment of undetermined size due in 24 months. What must the second payment be for the two streams to be economically equivalent? Assume that money can earn 6% compounded quarterly.

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Definitions:

Adherence

The degree to which a person’s behavior corresponds with agreed recommendations from a healthcare provider.

Noncompliant Personality

A behavioral disposition characterized by resistance or refusal to follow rules or instructions.

Smoking Cessation

The process of discontinuing tobacco smoking, which can reduce the risks of developing many health issues, including cardiovascular disease and cancer.

Health Belief Model

A psychological model that attempts to explain and predict health behaviors by focusing on the attitudes and beliefs of individuals.