6) Debts of $7,000 due 9 months ago from today and $8,000 due in 3 years from today will be replaced by a $4,000 payment today and another payment in two (2) years from today. If the cost of money (the cost of the loan) is 8% compounded quarterly, how large should that unknown payment be? (Best Focal Point is in 2 years from today)- (Equivalent Value question-use timeline-4 marks)

(If you get the answer right, you get full marks, even without a, b & c)

a. What is the value of $7,000 at the focal point?

b. What is the value of $8,000 at the focal point?

c. What is the value of $4,000 at the focal point?

d. What is the amount of the unknown payment in 2 years?