A) 1389 | B) 1359 |

C) 1379 | D) 1339.33 |

Explanation:

Given:j=7% compounded semiannually making m=2 and i = j/m= 7%/2 = 3.5%

Let x represent the third payment. Then the second payment must be 2x.

PV1,PV2, andPV3 represent the present values of the first, second, and third payments.

Since the sum of the present values of all payments equals the original loan, then

PV1 + PV2 +PV3 =$4000 -------(1)

PV1 =FV/(1 + i)^n =$1000/(1.035)^4= $871.44

At first, we may be stumped as to how to proceed for

PV2 and PV3. Let’s think about the third payment of x dollars. We can compute the present value of just $1 from the x dollars

pv=1/(1.035)^10=0.7089188

PV2 =2x * 0.7089188 = 1.6270013x

PV3 =x * 0.7089188=0.7089188x

Now substitute these values into equation ➀ and solve for x.

$871.442 + 1.6270013x + 0.7089188x =$4000

2.3359201x =$3128.558

x=$1339.326

Kramer’s second payment will be 2($1339.326) =$2678.65, and the third payment will be $1339.33

A) Rs.2628 | B) Rs.2662 |

C) Rs.2600 | D) Rs.3200 |

A) Rs.400 | B) Rs.390 |

C) Rs.380 | D) Rs.350 |

A) Rs. 2000 | B) Rs. 2050 |

C) Rs. 2100 | D) Rs. 2150 |

A) 21750 | B) 22050 |

C) 23250 | D) 24650 |

A) Rs.9000 | B) Rs.9500 |

C) Rs.10,000 | D) Rs.10,500 |

A) 3 years | B) 4 years |

C) 2 years | D) 1 year |