You are supposed to make three payments, $550 in 4 months, $780 in 11 months, and $300 in 20 months. If you want to discharge your debt in 15 months with a single payment and the interest rate is 9% compounded monthly, what would the single payment be?
Let us first calculate the amount you originally owed, by taking the compound interest formula,
and solving it for the principal P:
We need to apply this formula to each payment and add them:
P=550 (1+0.09/12)-4 + 780 (1+0.09/12)-11 + 300 (1+0.09/12)-20
If we paid back this amount with compound interest in a single payment after 15 months it would be