When

Roberta

borrowed

$954.00

she agreed to repay the loan in two equal payments, to be made

30

days and

110

days from the day the money was borrowed. If interest is

8%

on the loan, what is the size of the equal payments if a focal date of today is used?

 

 

Represent the payments made at each of the times with variable expressions. Then use the present value formula to find the equivalent values of those payments today. Use these two variable expressions and the known loan amount to solve for the amount of the equal payments. The present value formula is shown below, where P is the present value, S is the future value, r is the rate of interest (expressed as a decimal), and t is the time in years.

 

The value of the equal payments is

$