equivalent value

[Sue0113]

Could someone help e find the formula?

You owe $700 in 35 days and you missed the payment. You also owe an additional $600 in 5 months. What single equivalent value is due if your focal date is today and you are paying at an interest rate of 8.46% on your debit?

 

[Sue0113]

need help finding formula

That should of been stated as you owed 700, 35 days ago, and you missed the payment.

 

[Sue0113]

Is this the correct formula and answer?

S=700[1+(.0846)35/365]
=700(1+.0846)(.0958904)
=700(1.0846)(.0958904)
=700(.104002727)
=72.80

600(1+.0846)5/12
600(1.0846)(.416666666)
600(.451916666)
=271.15

72.80+271.15+700+600=1643.95

 

[Sue0113]

rewrote the word problem word for word

The word for word problem is: You owe $700 35 days ago, and you missed the payment. You also owe an additional $600 in 5 months. What single equivalent value is due if your focal date is today and you are paying at an interest rate of 8.46% on your debit?

 

[willmoore21]

I do not think that question is answerable. Are we compounding over months, over days, continuously? In a real world situation, you would look to the contract and statute for answers on the overdue amount. Without any information on the relevant compounding period, the present value of the future amount due is indeterminate. I welcome the views of others.

I agree with, Jeff, is this a sub question? I.e, is this part c of a question where previous information may have been missed?

 

[Sue0113]

I checked with teacher she said nothing wrong with question

I submitted the following
700/1 + (.0846)35/65 = 700 x 1.00811328 = 705.68
600/1+(.08460)5/12 = 600 x 1.03525 = 621.15
621.15 +705.68 =1326.
She told me it was correct.
So I don't know!