Settle Your Debts with a Single Payment Today

Calculate the Single Payment to Settle Multiple Debts

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Question

If you owe 3 debts ($100 due 6 months from now, $500 due 8 months from now, and $1,000 due 11 months from now), what single payment can you make today to settle them, if interest is assessed at 10% per year, compounded monthly?

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Explanations

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A. B. C. D. E.

B

Find the answer to this question by solving 3 compound interest problems. On the BAII Plus, press 6 N, 10 divide 12 = I/Y, 0 PMT, 100 FV, CPT PV, which yields

$95.14. Then press STO 1. Then press 8 N, 500 FV, CPT PV, which yields $467.88. Then press + RCL 1 = STO 1. Then press 11 N, 1000 FV, CPT PV, which yields $912.76. Press + RCL 1 = to see the answer. On the HP12C, press 6 n, 10 ENTER 12 divide i, 0 PMT, 100 FV, PV. Then press STO 1. Then press 8 n, 500

FV, PV. Then press RCL 1 + STO 1. Then press 11 n, 1000 FV, PV. Press RCL 1 + to see the answer. Make sure the BAII Plus has the P/Y value set to 1.

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