Fred must pay a $25,000 obligation one year from now. What end-of-month payments for twelve months would put the creditor in an equivalent financial position if the creditor can earn 9% compounded monthly?

A) $2,186.29
B) $1,863.67
C) $1,998.79
D) $2,170.01
E) $1,983.91

Compounded Monthly

A method of calculating the growth of an investment where the interest earned is added to the principal so that the balance doesn't merely grow, it grows at an increasing rate.

Obligation

A duty or commitment to fulfill a requirement, such as repayment of a debt or adherence to a contract.

End-of-month Payments

Payments made at the end of the billing month, often related to loans, utilities, or subscriptions.