Question 1193499: Julita owes Jose the following amounts:
a. 55,000 at the end of 4 years,
b. 48,000 at the end of 5 years, and
c. 75,000 due in 3 years from today at 9% converted quarterly.
What single payment at the end of 2 years will settle Julita’s
obligations if money is worth 15% converted monthly?
Found 2 solutions by ElectricPavlov, ikleyn:
Answer by ElectricPavlov(122)   (Show Source):
You can put this solution on YOUR website! **1. Calculate the Present Value of Each Obligation:**
* **Obligation 1:**
* Present Value (PV1) = 55,000 / (1 + 0.15/12)^(4*12)
* PV1 = 55,000 / (1.0125)^48
* PV1 ≈ 26,534.62
* **Obligation 2:**
* Present Value (PV2) = 48,000 / (1 + 0.15/12)^(5*12)
* PV2 = 48,000 / (1.0125)^60
* PV2 ≈ 19,737.68
* **Obligation 3:**
* Quarterly interest rate for Obligation 3: 0.09 / 4 = 0.0225
* PV of Obligation 3 at the end of 3 years: 75,000 / (1 + 0.0225)^(3*4) = 75,000 / (1.0225)^12
* PV of Obligation 3 at the end of 3 years: ≈ 57,096.79
* Present Value (PV3) = 57,096.79 / (1 + 0.15/12)^(3*12)
* PV3 = 57,096.79 / (1.0125)^36
* PV3 ≈ 35,320.95
**2. Calculate the Total Present Value of All Obligations**
* Total Present Value (Total PV) = PV1 + PV2 + PV3
* Total PV = 26,534.62 + 19,737.68 + 35,320.95
* Total PV ≈ 81,593.25
**3. Calculate the Single Payment at the End of 2 Years**
* Single Payment = Total PV * (1 + 0.15/12)^(2*12)
* Single Payment = 81,593.25 * (1.0125)^24
* Single Payment ≈ 120,984.66
**Therefore, a single payment of approximately 120,984.66 at the end of 2 years will settle Julita's obligations.**
Answer by ikleyn(52781)  (Show Source):
You can put this solution on YOUR website! .
Julita owes Jose the following amounts:
a. 55,000 at the end of 4 years,
b. 48,000 at the end of 5 years, and
c. 75,000 due in 3 years from today at 9% converted quarterly.
What single payment at the end of 2 years will settle Julita’s
obligations if money is worth 15% converted monthly?
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I checked calculations in the post by @ElectricPavlov.
They ALL are INCORRECT.
The general formulas are correct, but each and every calculation in his post produces WRONG NUMBER as an output.
In addition, the problem's formulation in the post is MONSTROUS: its different parts
are not consistent each to other, so at these circumstances it is hopeless even to try to solve
the problem: firstly it should be formulated/worded/presented in a right way.
As it is presented in the post, it is not a Math problem.
It is soup of words, which is as far from to be a Math problem, as the ground is far from the heaven.
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