You begin work on June 1 and work until August 31, and receive pay on the last day of the month. Your expenses for these three months are $1500 I mo. At the end of September, you make a $7000 payment, and you make an identical payment at the end of January. Your expenses from September 1 through May 31 are $1000/mo.

a. Draw a discrete, nondiscounted cash flow diagram for this situation.

b. If you earn 4% interest, compounded monthly, on the money until it is spent, what monthly salary is required from June 1 through August 31 to break even on May 31?

c. If you earn 4% interest, compounded monthly, on the money until it is spent and the salary is $4000 I mo, how much would you have to earn each month from a different job from September through May to break even on May 31?

d. What situation is depicted in this problem?

Answer rating: 100% (QA)

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