Assume you borrow $10,000 today and promise to repay the loan in two payments, one in year 2 and the other in year 4, with the one in year 4 being only half as large as the one in year 2. At an interest rate of 10% per year, the size of the payment in year 4 is closest to:

(a) $4280
(b) $3975
(c) $3850
(d) $3690


10,000 = 2x(P/F,10%,2) + x(P/F,10%,4)
10,000 = 2x(0.8264) + x(0.6830)
2.3358x = 10,000

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