wo payments of $16,000 and $6,800 are due in 1 year and 2 years, respec alculate the two equal payments that would replace these payments, mad nonths and in 4 years if money is worth 5% compounded quarterly. $0.00

wo payments of $16,000 and $6,800 are due in 1 year and 2 years, respec alculate the two equal payments that would replace these payments, mad nonths and in 4 years if money is worth 5% compounded quarterly. $0.00

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section4.17: Amortized Loans

Problem 1ST

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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

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Two payments of $16,000 and $6,800 are due in 1 year and 2 years, respectively.
Calculate the two equal payments that would replace these payments, made in 6
months and in 4 years if money is worth 5% compounded quarterly.
$0.00
Round to the nearest cent

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