ActSci Mathematics of Finance Equations of Value
Homework Answers
Let the size of each payment be "x".
(i) Focal date is 1 year hence: x[1+(0.08)(6/12)] + x = 1000[1+(0.08)(12/12)
or 2.04x = 1080
or x = $529.41
(ii) Focal date is today: x[1+(0.08)(6/12)]^(-1) + x[1+(0.08)(12/12)]^(-1) = 1000
or 1.8875x = 1000
or x = $529.81
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