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b. Calculate the upfront amount that she should pay under the alternative payment agreement so that the payments are equivalent. $1,050.70 X Round to the nearest cont

b. Calculate the upfront amount that she should pay under the alternative payment agreement so that the payments are equivalent. $1,050.70 X Round to the nearest cont

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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b. Calculate the upfront amount that she should pay under the alternative payment agreement so that the payments are equivalent. $1,050.70 Round to the nearest cent
Transcribed Image Text:b. Calculate the upfront amount that she should pay under the alternative payment agreement so that the payments are equivalent. $1,050.70 Round to the nearest cent
Amber was supposed to make a payment of $4,500 in 3 years and another payment for $1,500 in 4 years to Loon Company as part of a payment plan. Instead, she is trying to reach an agreement with the company where she would pay an upfront amount now, and an amount of $1,900 in 6 years. Assume that money is worth 9.00% compounded quarterly. a. Calculate the equivalent value of the $4,500 payment and the $1,500 payment today. Show Transcribed Text $3,152.10 X G a. Calculate the equivalent value of the $4,500 payment and the $1,500 payment today. Round to the nearest cent ( b. Calculate the upfront amount that she should pay under the alternative payment agreement so that the payments are equivalent.
Transcribed Image Text:Amber was supposed to make a payment of $4,500 in 3 years and another payment for $1,500 in 4 years to Loon Company as part of a payment plan. Instead, she is trying to reach an agreement with the company where she would pay an upfront amount now, and an amount of $1,900 in 6 years. Assume that money is worth 9.00% compounded quarterly. a. Calculate the equivalent value of the $4,500 payment and the $1,500 payment today. Show Transcribed Text $3,152.10 X G a. Calculate the equivalent value of the $4,500 payment and the $1,500 payment today. Round to the nearest cent ( b. Calculate the upfront amount that she should pay under the alternative payment agreement so that the payments are equivalent.
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