Scheduled payments of $8,000 and $9,000 are due 2 years and 3 years from today. The payments have been replaced by a $5,000 in four years and another payment one year from now. Determine the value of the final payment if interest is 3.85% compounded monthly.
A) $11,352.15
B) $11,408.68
C) $11,576.93
D) $11,762.43
E) $11,981.07

Question

Quizplus · Accepted Answer

To find the value of the final payment, we need to equate the present value of the original payments to the present value of the new payments. Calculate the present value of the original payments and the new $5,000 payment, then solve for the final payment using the formula for present value with interest compounded monthly.

Scheduled Payments of $8,000 and $9,000 Are Due 2 Years