7. To repay a loan, payments of 300, 500 and 700 are made at the end of years five, six and eight, respectively. Alternatively, one can make a lump payment of 1500 at time T. Suppose that both these repayment arrangements have the same present value with the annual effective interest rate being 4%. (a) Find the exact value of T. (b) Use the dollar weighted average to approximate T. Call it T. (c) Using (a) and (b), verify that T >T. 7. To repay a loan, payments of 300, 500 and 700 are made at the end of years five, six and eight, respectively. Alternatively, one can make a lump payment of 1500 at time T. Suppose that both these repayment arrangements have the same present value with the annual effective interest rate being 4%. (a) Find the exact value of T. (b) Use the dollar weighted average to approximate T. Call it T. (c) Using (a) and (b), verify that T >T