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February 19th, 2015, 09:45 AM   #1
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SIMPLE interest

Found this problem:

3 payments of 4000 due in 4, 8 and 12 months are to be
settled by 5 equal payments due today, 3 months from now,
6 months from now, 9 months from now and 12 months from now.

What is the size of the equal payments if SIMPLE interest
is used, and the interest rate is 12.75% ?

My solution is 2352.06

Anybody agree/disagree? Thanks.
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February 22nd, 2015, 02:41 PM   #2
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I agree. The question seemed confusing initially, but was clear after a while. You forgot to mention the unit of the interest rate (p.a.).
Thanks from Denis
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February 22nd, 2015, 04:57 PM   #3
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I also initially thought the interest unit should have been mentioned.
But then I assumed that with SIMPLE interest,
it was effective annual unless otherwise specified.
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