Part A- ( 5 marks)

An invoice states that interest will be charged on overdue accounts at the rate of 1% per month. What will be the interest charges on a $3,760 billing that is 3 months overdue?

Part B- (5 marks)

A two-payment stream consisting of $1,750 due today and $2,900 due in 18 months is to be replaced by an economically equivalent stream comprised of an undetermined payment due in 9 months and a payment of $3,000 due in 19 months. Calculate the unknown replacement payment if money is worth 4.2% compounded monthly.