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Calculate the upfront amount

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Katie was supposed to make a payment of $4,750 in 2 years and another payment for $600 in 5 years to Loon Company as part of a payment plan.

Instead, she is trying to reach an agreement with the company where she would pay an upfront amount now, and an amount of $1,700 in 4 years. Assume that money is worth 6.06% compounded quarterly. 

a. Calculate the equivalent value of the $4,750 payment and the $600 payment today. Round to the nearest cent

b. Calculate the upfront amount that she should pay under the alternative payment agreement so that the payments are equivalent.

Reference no: EM132596383

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