document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1169927>Question 1169927</A>: <I><SPAN STYLE=\"word-break: break-all;\"> What single sum of money paid at the end of 3 years will fairly discharge two debts, one $3000 due in two years and another $2500 due in 5 years, if the interest rate is 3% compounded annually. </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #794766 by </B><A HREF=/tutors/aboutme.mpl?userid=Theo><B>Theo(13342)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=Theo><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=Theo><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=794766\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> one debt is due in 2 years.<BR>\n" );
document.write( "one debt is due in 5 years.\r<BR>\n" );
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document.write( "interest rate is 3% compounded annually.\r<BR>\n" );
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document.write( "you want to find the amount that you would have to pay in 3 years that would allow you to fairly discharge these debts.\r<BR>\n" );
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document.write( "you owe 3000 in two years and 2500 in 5 years.\r<BR>\n" );
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document.write( "your common year is 3 years out.\r<BR>\n" );
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document.write( "you want to bring all money back to that common year.\r<BR>\n" );
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document.write( "the easiest way to do this is to bring everything back to the present year and then bring it all back up to the future year of your choice.\r<BR>\n" );
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document.write( "3000, due in year 2, is brought back to the current year by dividing it by 1.03^2.\r<BR>\n" );
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document.write( "2500, due in year 5, is brought back to the current year by dividing it by 1.03^5.\r<BR>\n" );
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document.write( "you get:\r<BR>\n" );
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document.write( "3000 / 1.03^2 + 2500 / 1.03^5 = 4984.309688.\r<BR>\n" );
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document.write( "4984.309688, brought up to year 3, is multiplied by 1.03^3 to get 5446.489773.\r<BR>\n" );
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document.write( "round to 2 decimal places to get an equivalent value, paid in year 3, of 5446.49.\r<BR>\n" );
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document.write( "that's your solution.\r<BR>\n" );
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document.write( "alternatively, you can bring everything back to the common year directly.\r<BR>\n" );
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document.write( "3000, due in 2 years, is multiplied by 1.03 to get an equivalent value of 3090 in year 3.\r<BR>\n" );
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document.write( "2500, due in 5 years, is divided by 1.03^2 to get an equivalent value of 2356.489773 in year 3.\r<BR>\n" );
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document.write( "add these up and you get an equivalent value of 5446.489773 due in year 3.\r<BR>\n" );
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document.write( "round to 2 decimal places to get 5446.49.\r<BR>\n" );
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document.write( "you'll get the same value in year 3 using either method.\r<BR>\n" );
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document.write( " </SPAN>\n" );
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