1. 5 months ago, Kevin borrowed a total of $1500 from Angela. They agreed to split the loan into amounts of $600 and $900, to be paid 6 and 11 months from the date of the agreement, respectively. On both of these payments, Kevin agreed to pay interest on each of the principle amounts at the rate of 12%.

Kevin now wishes to repay the loan in one single payment, 5 months from now. If money can now earn 7% rate of return, what single payment should Kevin require?

Timeline Hint:

5 months ago Today 1 months from now 5 months from now 6 months from now

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2. A payment stream consisting of $1812 due (but not paid) 11 months ago, and $3747 due in 9 months is to be replaced with the following equivalent set of payments: an unknown payment due today, and a payment of $1684 due in 17 months. What is the amount of the payment due today if the rate of simple interest is 3.82%? Give your answer rounded to the nearest cent and use today as the focal date.

3.A debt of $1410 was due 108 days ago and one of $1916 is due in 265 days. A credit advisor decides you should settle the debts with two equal payments: the first payment is to be made today and the second in 449 days from today. Find the size of the equal payments if interest is 5.3% per annum. Use today as your focal date, and give your answer rounded to the nearest cent.

4.What is the value of the following payment stream 1 year from now, at a simple interest rate of 7.9%.

• $10,000 3-years ago,
• $6,000 1.25 years ago,
• $12,000 due in 3 years,
• $18,000 due in 5 years.
• What is the value of the payment stream at the focal date?

5. 4 months ago, Kevin borrowed a total of $1300 from Angela. They agreed to split the loan into amounts of $520 and $780, to be paid 7 and 11 months from the date of the agreement, respectively. On both of these payments, Kevin agreed to pay interest on each of the principle amounts at the rate of 12%.

Kevin now wishes to repay the loan in one single payment, 4 months from now. If money can now earn 9% rate of return, what single payment should Kevin require?

Timeline Hint:

4 months ago Today 3 months from now 4 months from now 7 months from now

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6.What amount is equivalent today to a sum of $3997.21 paid 18 months ago, and a payment of $4812.42 due in 2.6 years? Assume the rate of simple interest is 3.3%

7.Ricardo takes out a loan from Enrique. It is agreed that Ricardo will pay back the loan in two payments, $3836 after 2 years and $3990 after 6 years. Ricardo decides he wants to renegotiate the payment schedule so that he has two equal payment at 2 and 5 years. What should Ricardo's equal payments be? (Assume Enrique can earn 6% interest compounded weekly)