Question: Pflug Ltd. signed an instalment note on January 1, 2011 in settlement of an account payable of $40,000 owed to Mott Ltd. Pflug is able

Pflug Ltd. signed an instalment note on January 1, 2011 in settlement of an account payable of $40,000 owed to Mott Ltd. Pflug is able to borrow funds from its bank at 11%, whereas Mott can borrow at the rate of 10%. The note calls for two equal payments of blended principal and interest to be made at December 31, 2011, and 2012. Calculate the amount of the equal instalment payments that will be made to Mott Ltd.

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