One year ago Fred bought a forklift for his manufacturing business on an installment plan. The...

 

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One year ago Fred bought a forklift for his manufacturing business on an installment plan. The plan specified that he make a down payment of $15,000 immediately, and pay installments of $20,000 after three months and nine months. Fred made the down payment, but did not pay the $20,000 installments that were due nine months ago and three months ago. The seller agreed to discharge his debt with a payment of $25,000 today, a second payment six months from today and a third payment one year from today. The second payment will be $3,000 more than the third payment. The interest rate charged is 12% compounded quarterly. Suggested focal date: six months from today. (a) Find the size of the last two payments (b) How much extra interest did he have to pay? One year ago Fred bought a forklift for his manufacturing business on an installment plan. The plan specified that he make a down payment of $15,000 immediately, and pay installments of $20,000 after three months and nine months. Fred made the down payment, but did not pay the $20,000 installments that were due nine months ago and three months ago. The seller agreed to discharge his debt with a payment of $25,000 today, a second payment six months from today and a third payment one year from today. The second payment will be $3,000 more than the third payment. The interest rate charged is 12% compounded quarterly. Suggested focal date: six months from today. (a) Find the size of the last two payments (b) How much extra interest did he have to pay?

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