Question

Loan payments of S700 due three months ago and of S1000 due today are to be paid by a payment of $800 in two months and a final payment in five months. 19% interest is allowed, and the focal date is five months from now, what is the amount of the final payment? The amount of each payment is $ (Round the final answer to the nearest cent as needed Round all intermediate values to six decimal places as needed)

Answer 1

1)The focal date is the date of the last payment which is five months from now

So loan payment of $700 due three months ago==>3+5= 8 months

$1000 due today ==> 5 months

$800 in two months ==> 2 months

final payment ==> 5months

Let final payment be X

We consider simple interest as compound is not mentioned

interest=r=9%=0.09

The amount of the debt :

$=700(1+0.09*\frac{8}{12})+1000(1+0.09*\frac{5}{12})\\ =742+1037.5=1779.5$

The amount of the repayments :

$=800(1+0.09*\frac{2}{12})+X =812+X$

Here we have

amount of the debt=amount of the repayments

Amount of final payment =

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