Question: The principal plus interest at 10% compounded quarterly on a $15,000 loan made 2 years ago is due in two years. The debtor is

The principal plus interest at 10% compounded quarterly on a $15,000 loan made 2 ½ years ago is due in two years. The debtor is proposing to settle the debt by a payment of $5000 today and a second payment in one year that will place the lender in an equivalent financial position, given that money can now earn only 6% compounded semiannually.
a. What should be the amount of the second payment?
b. Demonstrate that the lender will be in the same financial position two years from now with either repayment alternative.

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