2) Eight months ago, Louise agreed to pay Thelma $750 and $950 six and twelve months, respectively, from the date of the agreement. With each payment Louise agreed to pay interest at the rate of 9.5% pa. from the date of the agreement.

Question

Louise could not follow the agreement, nothing was paid. Now she whishes to settle her obligations with a single payment, four months from now. What payment should Thelma be willing to accept if money can earn 7.75% ?

Answer 1

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