A payment of \( \$ 2,760 \) is due in 60 days and another payment of \( \$ 2,770 \) is due in 175 days. Calculate the single equivalent payment to be made in 80 days to settle the two payments if mone

Answer 1

To find the single equivalent payment, we need to calculate the present value of each payment and then add them together.

The present value of the first payment of $2,760 due in 60 days can be calculated using the formula:

PV = FV / (1 + r)^n

where PV is the present value, FV is the future value, r is the interest rate per period, and n is the number of periods.

Assuming an annual interest rate of 5%, we can convert it to a daily interest rate by dividing by 365:

r = 5% / 365 = 0.0137 (rounded to four decimal places)

Plugging in the values, we get:

PV1 = $2,760 / (1 + 0.0137)^60
PV1 ≈ $2,664.30

The present value of the second payment of $2,770 due in 175 days can be calculated using the same formula:

PV2 = $2,770 / (1 + 0.0137)^175
PV2 ≈ $2,541.27

Now, we can find the single equivalent payment by adding the present values:

Single Equivalent Payment = PV1 + PV2
Single Equivalent Payment ≈ $2,664.30 + $2,541.27
Single Equivalent Payment ≈ $5,205.57

Therefore, the single equivalent payment to be made in 80 days to settle the two payments is approximately $5,205.57.