Loan payments of $1,600 due one year ago and $3,250 due in two years are to be
Question:
Loan payments of $1,600 due one year ago and $3,250 due in two years are to be replaced by two payments. The first replacement payment of $X is due in one year and the second replacement payment of $2,900 is due in four years. Determine the size of the first replacement payment $X if interest is 3.4% p.a. compounded quarterly and the focal date is one year from now (Year 1). Answer the following questions, and choose the closest answer from the possible choices following each question:
If the focal date is one year from now, which TVM variable does the payment $3,250 represent?
If the focal date is one year from now, which TVM variable does the payment $1,600 represent?
If you need to use the formula approach to find the focal date value manually, what value of "n" should you apply to the first loan payment of $1,600?
What periodic interest rate do you use if you need to solve this question manually using the formula approach?
Before solving for the unknown $X, you need to determine the compounding factors for each of the payments. (Answer Yes or No)
Vector Mechanics for Engineers Statics and Dynamics
ISBN: 978-0073398242
11th edition
Authors: Ferdinand Beer, E. Russell Johnston Jr., David Mazurek, Phillip Cornwell, Brian Self