Question
Q1: A contract requires that Bob makes payments of $1100 and $2667 to Jim 24 and 42 months respectively. Bob would like to change the
Q1: A contract requires that Bob makes payments of $1100 and $2667 to Jim 24 and 42 months respectively. Bob would like to change the payment structure to a payment of $1727 today, and a second payment made 39 months from today. If the two sets of payments are economically equivalent, and the interest rate is 4.1% compounded quarterly, then what is the amount of the second payment? Give your answer rounded to the nearest cent.
Q2: Payments of $3435 due 4 years ago and $4556 due in 8 years are to be replaced by a payment of $2175 made today and 2 equal payments due in 15 and 28 months respectively. If interest is 4.5% compounded monthly, then in what amount are the final two payments? Give your answer rounded to the nearest cent.
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