A $25,000 Obligation Is to Be Repaid by Two Payments

Multiple Choice

A $25,000 obligation is to be repaid by two payments. The first payment is one year from now, while the second is 2 years from now. In addition, the second payment will be twice the amount of the first. Interest is 6.65% compounded annually. Using the financial functions on the calculator, determine the size of each payment.

A) Payment #1 = $8,887.50; Payment #2 = $17,775
B) Payment #1 = $5,550.50; Payment #2 = $11,101
C) Payment #1 = $8,500; Payment #2 = $17,000
D) Payment #1 = $10,000.50; Payment #2 = $20,001
E) Payment #1 = $17,775; Payment #2 = $8,887.50