PROBLEM 1: A man borrowed P3 000 to be paid after 18 months with interest at 12% compounded semi-annually and P5 000 to be paid after 36 months at 12% compounded monthly .What single payment must he pay after 42 months at an interest rate of 16% compounded quarterly to settle the two obligations ?

PROBLEM 1: A man borrowed P3 000 to be paid after 18 months with interest at 12% compounded semi-annually and P5 000 to be paid after 36 months at 12% compounded monthly .What single payment must he pay after 42 months at an interest rate of 16% compounded quarterly to settle the two obligations ?

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 19PROB

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Concept explainers

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

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PROBLEM 1: A man borrowed P3 000 to be paid after 18 months with interest at 12% compounded semi-annually
and P5 000 to be paid after 36 months at 12 % compounded monthly . What single payment must he pay
after 42 months at an interest rate of 16% compounded quarterly to settle the two obligations ?

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