The Principal Plus Interest at 10% Compounded Quarterly on a $15,000

question 229

Short Answer

The principal plus interest at 10% compounded quarterly on a $15,000 loan made 2½ years ago is due in two years. The debtor is proposing to settle the debt by a payment of $5,000 today and a second payment in one year that will place the lender in an equivalent financial position, given that money can now earn only 6% compounded semi-annually.
a) What should be the amount of the second payment?
b) Demonstrate that the lender will be in the same financial position 2 years from now with either repayment alternative.

---

Definitions:

American Culture

The set of customs, traditions, beliefs, and social behaviors that are characteristic of the United States and its inhabitants.

Expressing Anger

The act of communicating feelings of anger in a variety of ways, which can be constructive or destructive depending on the method of expression.

Feminist Researchers

Scholars who focus on studying gender inequalities, women's rights, and challenges within various societal structures from a feminist perspective.

Gender-Related Differences

Variations in characteristics, behaviors, and roles predominantly attributed to the biological or perceived differences between sexes.