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    Business Math : Compounding Interest - Amount of Payments

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    John recently incurred the following debts:
    1. $500 due in one year
    2. $800 plus interest at 12% compounded semi-annually due in two years.

    He wishes to discharge these debts by making 3 equal payments. The first payment will be due in 6 months, the second in 18 months and the third in 30 months. What is the size of these payments if money is worth 10% compounded quarterly and a focal date of 18 months is used for evaluation purposes?

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    Solution Summary

    Payments for a debt with compound interest are calculated. The soultion is well presented.