1. Your friend was supposed to repay a loan with a loan payment of $1,300 due in 6 months and another loan payment of $1,800 due in 3 years. However, your friend agrees to make two payments that replace the originally scheduled payments. The first replacement payment of $X is due in 2 years and the second replacement payment of $2,000 is due in 5 years. Suppose the interest is 3.2% p.a. compounded quarterly and the focal date is 2 years from now (Year 2), your friend asks for your help to determine the size of the second replacement payment, $X. Answer the following question: If the focal date is at year 2, which variable does payment $2,000 represent? (Choose from FV, PV, n, or i)

2.

Your friend was supposed to repay a loan with a loan payment of $1,300 due in 6 months and another loan payment of $1,800 due in 3 years. However, your friend agrees to make two payments that replace the originally scheduled payments. The first replacement payment of $X is due in 2 years and the second replacement payment of $2,000 is due in 5 years. Suppose the interest is 3.2% p.a. compounded quarterly and the focal date is 2 years from now (Year 2), your friend asks for your help to determine the size of the second replacement payment, $X. Answer the following question: If you use the financial calculator TVM keys to solve for the focal date equivalent values, which TVM key in the financial calculator should be set equal to zero?

3. Your friend was supposed to repay a loan with a loan payment of $1,300 due in 6 months and another loan payment of $1,800 due in 3 years. However, your friend agrees to make two payments that replace the originally scheduled payments. The first replacement payment of $X is due in 2 years and the second replacement payment of $2,000 is due in 5 years. Suppose the interest is 3.2% p.a. compounded quarterly and the focal date is 2 years from now (Year 2), your friend asks for your help to determine the size of the second replacement payment, $X. Answer the following question:

Your answer for $X at the focal date is $Answer.=( _______ )(Express in 2 decimals) Hint: Based on your answer in Q1 and the replacement payment in Q2, you will need to determine $X.

Note: to receive the full mark, you will use all the decimal places when performing calculations, round to 2 decimal places in your final answer, and there is no need to include other symbols such as $ and comma in your final answer.