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April 20, 2014

Homework Help: Business Mathematics

Posted by Leo on Monday, June 24, 2013 at 10:06pm.

Jungle Jim owes three debts:

$500 due in one year plus interest at 6% semi-annually, $2000 due in two years, $1000 due in three years plus interest at 5% compounded monthly.

He wishes to discharge these debts by paying $500 now and two equal but unknown payments in one and two years respectively. Find the size of the equal payments if money is, at present, worth 12% compounded quarterly. Use focal date of two years.

I know I need to use the formulas PV=FV(1+i)^-n and FV=PV(1+i)^n but not sure how to approach the question

PV= present value
FV= future value
i=interest rate
n=number of compounding periods

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