of A company buys a machine for $17,000, which it agrees to pay for in five equal annual payments, beginning one year after the date of purchase, at an annual interest rate of 6.5%. Immediately after the second payment, the terms of the agreement are changed to allow the balance due to be paid off in a single payment the next year. What is the final single payment? Solution: 1. Draw the CFD by yourself; 2. First, calculate annual payment amount for the first 2 years: AN X * 6.5% )-17000x The final payment is the worth of the unpaid payments. 3. Second, Calculate the single payment amount due at the end of the 3rd year: F=$ A company buys a machine for $17,000, which it agrees to pay for in five equal annual payments, beginning one year after the date of purchase, at an annual interest rate of 6.5%. Immediately after the second payment, the terms of the agreement are changed to allow the balance due to be paid off in a single payment the next year. What is the final single payment? Solution: 1. Draw the CFD by yourself 2. First, calculate annual payment amount for the first 2 years: A= XC 6.5%, + )-17000X The final payment is the worth of the unpaid payments. 3. Second, Calculate the sing present annual future Jount due at the end of the 3rd year: F-S