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1. A) A debt of $ 3000 due in 3 years and $4500 due in six years is to be repaid by a single payment
1. A) A debt of $ 3000 due in 3 years and $4500 due in six years is to be repaid by a single payment of $1500 now and a second payment after 4 years. If the interest rate is 6% compounded annually, how much is the second payment? (5) B). In 8 years, a $ 40,000 machine will have a salvage value of $ 5000. A new machine at that time is expected to sell for $ 50,000. In order to provide funds for the difference between the replacement cost and the salvage value, a sinking fund is set up into which equal payments are placed at the end of each year. If the fund earns 6% compounded annually, how much should each payment be? 3
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