Question: Eli has agreed to repay a debt by using the following repayment schedule. Starting today, he will make $ 5 0 0 payments at the

Eli has agreed to repay a debt by using the following repayment schedule. Starting today, he will make $

500

payments at the beginning of each quarter for the next two years. After two years, he will make $

1000

payments at the beginning of each quarter for another two years, which will pay off his debt completely. For the first two years, the interest on the debt is

7 %

compounded monthly. For the next two years the interest is lowered to

5 %

compounded annually. Determine the size of Eli's debt as of today.

(

Hint: Timeline really helps.

)

PLEASE USE THE CALCULATOR MODE AND DRAW THE TIMELINE

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