Thread: Finding equal size payments

Jon owes three debts:
$500 in one year plus interest at 6% compounded semi-annually,
$2000 due in two years,
$1000 due in three years plus interest at 5% compounded monthly

He wishes to discharge these debts by paying $500 now and two equal but unknown payments in one and two years respectively. Find the size of the equal payments if money is, at present, worth 12% compounded quarterly, using a focal date of 2 years.

It seems odd at first that you did not give us the interest crediting methodology for the $2,000. This difficulty is solved, however, by calculating at the time of that cash flow - as instructed by the very end of the problem statement.

Having said that, just build it!

P is the size of the two equal payments at years 1 and 2.

Here's the debts:



Here's the discharging payments:



Now what?

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