1. Feb 18, 2009

### banana_banana

1. The problem statement, all variables and given/known data

What single payment made immediately will settle the following obligations if money is worth 18 % compounded semi-annually

a.) 5000 due in 3 years
b.) 6000 due in 3 and 1/2 years with 10% simple interest rate
c.) 7000 due in 5 and 1/4 years with interest at 16% compounded semi-annually[

Is there anyway I can find the comparison date which is not stated in the problem if it only says that single payment will be made immediately? What should I do with this?

Last edited: Feb 18, 2009
2. Feb 18, 2009

### Tom Mattson

Staff Emeritus
Not sure what "ff. obligations" means, but I'm sure you need to compute the future value of those accounts. Since it's simple interest, that shouldn't pose any problem. Just remember that in a.) the interest rate is zero.

I have no idea of what you're asking here.

3. Feb 18, 2009

### banana_banana

I want to ask, how can i determine the comparison date in the problem if it only says the single payment will be made immediately?

4. Feb 18, 2009

### Tom Mattson

Staff Emeritus

5. Feb 18, 2009

### banana_banana

comparison date is also called common date. This is sometimes referred to as the focal point. This identified date where accumulation or discounting of values are done from the last date these values are due.

6. Feb 18, 2009

### Tom Mattson

Staff Emeritus
Since no other dates are given in the problem it's obvious that you can't determine the comparison date from the given data. But it doesn't matter because that's not what you were asked to do. You were asked to find the final value of these accounts. That's a dollar amount, not a date.

7. Feb 18, 2009

### banana_banana

But how can I construct a time line required in my solution. In other words, how can I present a diagram showing the comparison date and obligations/payments?

8. Feb 18, 2009

### Tom Mattson

Staff Emeritus
Sorry, I'm not familiar enough with these terms to know what you are asking for. We're mostly scientists and mathematicians around here. You're going to have to present the relevant equations (that's why we ask for them in the template that automatically appears when you start a new thread). The definitions wouldn't hurt either. Nothing in the problem statement asks for this time line, and without knowing the definition no one here is going to be able to figure out how it arises in a problem.

9. Feb 18, 2009

### banana_banana

Well then, tnx for your time.

10. Feb 18, 2009

### symbolipoint

banana_banana, give the informtion that Tom Mattson asked for, because other forum readers might be interested in how financial things work and may be able to help you with your original question. Most of us who read and post on physicsforums.com studied sciences, mathematics, engineering,and/or computer knowledge. If we have the correct fundamental starter information, we or someone 'here' can help. Otherwise, generally, one would not expect 'us' to be skilled in finance beyond some simple ideas, used at a simple level (depending on what else any of us has studied).

11. Feb 23, 2009

### banana_banana

Mr. Tom Mattson: the equation using standard method will be: x=F1(1+i)^n+F2(1+i)^n......
If you're going to use the pure accumulation method it will be like: x(1+i)^n=F1(1+i)^n+F2(1+i)^n

I hope, i done what you and symbolipoint asked for. Well, that's how far I can respond. Guys, Sorry for the inconvenience.