Philip has two outstanding payments for a loan that he gave his friend: $7300, due two months ago, and another payment of $1800, due in eight months. If his friend promises to make one single payment in five months that would be equivalent to both these payments, what should be the size of the payment? Assume that money earns 3% p.a. simple interest.

a. Use five months from now as the focal date.

b. Use today as the focal date AppendixLO1