You owed $700.00 35 days ago, and you missed the payment. You also owe an additional $600 in 5 months. What single equivalent value is due if your focal date is today and you are paying at an interest rate of 8.46% on your debt?
A) $1403.83
B) $1304.83
C) $1204.83
D) $1503.83
E) $1285.25

Question

Quizplus · Accepted Answer

To find the single equivalent value due today, we need to discount the future payment and add it to the past due amount adjusted for the interest accrued. For the $700 due 35 days ago, we calculate the interest for 35 days at an annual rate of 8.46%. For the $600 due in 5 months, we discount it back to today's value at the same interest rate. The correct calculation leads to a single equivalent value of $1285.25.

You Owed $700