Arjun has taken a loan and debt can be repaid by payments of $425.00 today, $377.00 in two years and $560.00 in five years. What single payment would settle the debt three years from now if money is worth 6.25% p.a. compounded quarterly?
A) $1362.00
B) $1407.70
C) $1546.98
D) $1387.92
E) $1341.13

Question

Quizplus · Accepted Answer

To find the single payment that would settle the debt three years from now, we need to calculate the present value of each payment and then find the future value of these present values at the end of three years using the given interest rate. The correct calculation results in a future value of approximately $1407.70.

Arjun Has Taken a Loan and Debt Can Be Repaid