What Single Payment 6 Months from Now Would Be Equivalent

question 122

Short Answer

What single payment 6 months from now would be equivalent to payments of $500 due (but not paid) 4 months ago, and $800 due in 12 months? Assume money can earn 7.5% compounded monthly.

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Definitions:

Useful Life

The estimated duration of time that an asset is expected to be operational and economically viable.

Units-Of-Activity

A depreciation method where the expense is based on the actual usage or activity of the asset rather than the passage of time.

Production Based

A method or approach that focuses on enhancing the efficiency and output of the manufacturing process, often measured against set production targets.

Straight-Line

A method of allocating the cost of an asset evenly over its useful life for the purposes of depreciation or amortization.