Two Payments of $3,000 Each Are Due Today and Five

question 85

Short Answer

Two payments of $3,000 each are due today and five years from today. The creditor has agreed to accept three equal payments due one, three, and five years from now if the payments are based on the recognition that money can earn 7.5% compounded monthly. What payments will the creditor accept?

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Definitions:

Shortage

A market condition where the demand for a product or service exceeds its supply at a particular price.

Excess Demand

A market condition where the quantity demanded of a product exceeds the quantity supplied at a given price.

Price Ceiling

A government-imposed limit on how high a price can be charged for a product or service.

Price Ceiling

A government-imposed limit on how high a price can be charged on a product or service, intended to protect consumers.