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09-04 - Equivalent Payments

Section 9.4 discusses equivalent payments, providing examples of how to calculate a single payment that is equivalent to multiple future and past payments using specified interest rates and compounding periods. It includes scenarios involving loan payments and scheduled payments that need to be replaced by equal payments. The section emphasizes the importance of determining the focal date for accurate calculations.

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16 views

09-04 - Equivalent Payments

Section 9.4 discusses equivalent payments, providing examples of how to calculate a single payment that is equivalent to multiple future and past payments using specified interest rates and compounding periods. It includes scenarios involving loan payments and scheduled payments that need to be replaced by equal payments. The section emphasizes the importance of determining the focal date for accurate calculations.

Uploaded by

Mỹ Vượng
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Equivalent

Payments
Section 9.4

Topics

Section 9.1: Introduction


Section 9.2: Future Value
Section 9.3: Present Value
Section 9.4: Equivalent Payments
Section 9.5: Periodic Interest Rate and Nominal Interest Rate
Section 9.6: Number of Compounding Periods and Time Period
Section 9.7: Effective Interest Rates
Section 9.8: Equivalent Interest Rates
What single payment in two years would be equivalent to $1400 one
Section 9.4

year ago and $3700 in six years?


Assume a rate of 7.4% compounded semi-annually during this period.
Use two years as the focal date.
What single payment in two years would be equivalent to $1400 one
Section 9.4

year ago and $3700 in six years?


Assume a rate of 7.4% compounded semi-annually during this period.
Use two years as the focal date.
Section 9.4
Vanessa currently has to settle a loan with payments of $1500 on April 22,
2019 and $4500 on June 5, 2020. She is given the option of changing the
payments to $2000 on December 2, 2019 and the balance on October 27,
2020. Calculate the balance if money earns 6% compounded quarterly.
Section 9.4
Vanessa currently has to settle a loan with payments of $1500 on April 22,
2019 and $4500 on June 5, 2020. She is given the option of changing the
payments to $2000 on December 2, 2019 and the balance on October 27,
2020. Calculate the balance if money earns 6% compounded quarterly.
Section 9.4
Vanessa currently has to settle a loan with payments of $1500 on April 22,
2019 and $4500 on June 5, 2020. She is given the option of changing the
payments to $2000 on December 2, 2019 and the balance on October 27,
2020. Calculate the balance if money earns 6% compounded quarterly.
A scheduled payment of $7200 in 4 months is to be replaced by 2 equal Section 9.4

payments. The first payment is due in 3 months and the second payment
in 6 months. Calculate the size of the equal payments if money can earn
interest of 4.8% compounded monthly. Use 4 months as the focal date.
A scheduled payment of $7200 in 4 months is to be replaced by 2 equal Section 9.4

payments. The first payment is due in 3 months and the second payment
in 6 months. Calculate the size of the equal payments if money can earn
interest of 4.8% compounded monthly. Use 4 months as the focal date.
Homework

9.4 #1 – 29 (odd)

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