Javion Minerva owes P25,000 due in 1 year and P75,000 due in 4 years. He agrees to pay P50,000 today and the balance in 2 years. how much must he pay at the end of two years if the money is worth 5% compounded semi-annually?

Javion Minerva owes P25,000 due in 1 year and P75,000 due in 4 years. He agrees to pay P50,000 today and the balance in 2 years. how much must he pay at the end of two years if the money is worth 5% compounded semi-annually?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 23P

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Concept explainers

Amortized Loans

The term "amortization" refers to spreading the value of a loan or a debt over a series of regular payments or installments comprising of both the principal and interest amount. It generally involves the process where in the value of a loan or an intangible asset is written down over its maturity period.

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