Equations of Value

1. Marx owes Lyle $2000 due after 5 years and $3000 due after 3 years and 6 months. What sum paid now to Lyle will discharge these debts if money is worth (0.08, m = 2)?

2. Marx desires to discharge his obligations in problem 1 by two equal payments made at the ends of 1 year and of 1 year and 6 months, respectively. Find the payments to Lyle if money is worth (0.08, m = 4) .

3. Simon owes the following obligations

(a) $10,000 due after 4 years, and

(b) $2000 due after 3 years with accumulated interest at (0.07, m = 2)

He paid $8000 at the end of 3 years. What single additional payment should he make at the end of 5 years to cancel his obligations if money is worth (.04, m = 2) to his creditor?