Home » Aptitude » Compound Interest

Two payments of $10,000 each must be made one year and four years from now. If money can earn 9% compounded monthly, what single payment two years from now would be equivalent to the two scheduled payments?

Correct Answer: 19296

Explanation:

The single equivalent payment will be PV + FV.
FV = Future value of $10,000, 12 months later
 $10,000 *(1.0075)/12
 $10,938.07
PV=  Present value of $10,000, 24 months earlier
 $10,000/(1.0075)24
 $8358.31
The equivalent single payment is
$10,938.07 + $8358.31 = $19,296.38


← Previous Question Next Question→

Discussion & Comments

No comments yet. Be the first to comment!
Join Discussion