The executor of an estate agrees to settle all claims against the estate immediately at 4%...

 

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The executor of an estate agrees to settle all claims against the estate immediately at 4% effective. The obligations are as follows: a) A non-interest-bearing note for $5000 due on March 1, 1954. b) A bill of $1500 which was due on June 1, 1950. c) A note for $1000, drawn June 1, 1951, bearing interest at (04, m = 2). and maturing june 1, 1957. If $7000 liquidates these debts, find the year and month in which the settlement is made. (HINT: Use June 1, 1957, as the comparison date.) The executor of an estate agrees to settle all claims against the estate immediately at 4% effective. The obligations are as follows: a) A non-interest-bearing note for $5000 due on March 1, 1954. b) A bill of $1500 which was due on June 1, 1950. c) A note for $1000, drawn June 1, 1951, bearing interest at (04, m = 2). and maturing june 1, 1957. If $7000 liquidates these debts, find the year and month in which the settlement is made. (HINT: Use June 1, 1957, as the comparison date.)

Answer rating: 100% (QA)

To find the present value of the debts we need to discount their future cash flows using the effecti... View the full answer