Equivalent payments

[moredrivel]

I am calculating the following:

One payment after 2 years plus interest @ 6.5% compounded semi-annually and a second payment after 4 years of $3500 plus interest @ 7.2% compounded weekly.

What is the single equivalent payment amount for these 2 payments 3 years from now?


Answer:
I have calculated the maturity value of both the payments

2500 (1+.0325)^4 = 2841.18982
3500 (1+ .001384615)^208 = 4667.220758

Now to calculate the single equivalent payment, do you advance the $2841.18982 one year ?
2841.18982 (1 + .0325)^2 = 3028.868165 ?

and regress the second payment one year?
4667.220758 (1 + .001384615)^-52 = 4343.2094 ?

I think the answer is 7372.08

Is that right? I am practicing and I need to learn this concept.

thanks

 

[Denis]

One payment after 2 years plus interest @ 6.5% compounded semi-annually and a second payment after 4 years of $3500 plus interest @ 7.2% compounded weekly.
What is the single equivalent payment amount for these 2 payments 3 years from now?
Answer:
I have calculated the maturity value of both the payments
2500 (1+.0325)^4 = 2841.18982
3500 (1+ .001384615)^208 = 4667.220758
Now to calculate the single equivalent payment, do you advance the $2841.18982 one year ?
2841.18982 (1 + .0325)^2 = 3028.868165 ?
and regress the second payment one year?
4667.220758 (1 + .001384615)^-52 = 4343.2094 ?
I think the answer is 7372.08

Correct IF whoever is to receive the 2 payments agrees to this method!

Up here in HockeyLand, we'd have the "payer" and "payee" agree to a certain rate, say x% ;
this would be the rate that the "payee" expects during 3rd year on the 2year payment.