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October 21, 2025, 05:02:55 pm
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Author Topic: 2007 Exam 2 problems  (Read 947 times)  Share 

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andy0004

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2007 Exam 2 problems
« on: October 01, 2009, 08:02:20 pm »
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I have a problem with questions 2b and 2c in the Business maths section. I keep getting $16,574.50 and $618.11 instead of $16,800.78 and $622.75.

I have tried using TVM to solve it at least 10 times using the following for question 2b. I have also tried the annuities formula, but neither seems to work for me:

N = 60
I = 9
PV = 30 000
PMT = –400
FV = 0
P/Y = 12
C/Y = 12
 
FV comes out to equal $16,574.50. :(

Has anyone else had this problem, or is it likely I am just doing something very wrong somehow?  :idiot2:
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plato

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Re: 2007 Exam 2 problems
« Reply #1 on: October 02, 2009, 03:17:05 pm »
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Quote from: andy0004 on October 01, 2009, 08:02:20 pm
I have a problem with questions 2b and 2c in the Business maths section. I keep getting $16,574.50 and $618.11 instead of $16,800.78 and $622.75.

I have tried using TVM to solve it at least 10 times using the following for question 2b. I have also tried the annuities formula, but neither seems to work for me:

N = 60
I = 9
PV = 30 000
PMT = –400
FV = 0
P/Y = 12
C/Y = 12
 
FV comes out to equal $16,574.50. :(

Has anyone else had this problem, or is it likely I am just doing something very wrong somehow?  :idiot2:



The problem is your incorrect selection at the bottom of the TVM screen where you must select PMT:END and not PMT:BEGIN
« Last Edit: October 02, 2009, 03:54:08 pm by plato »
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andy0004

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Re: 2007 Exam 2 problems
« Reply #2 on: October 02, 2009, 08:25:21 pm »
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What difference does it actually make? It is just that I have never changed it from BEGIN and it has always worked since. Anyway, thanks, I will try this. :)
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plato

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Re: 2007 Exam 2 problems
« Reply #3 on: October 04, 2009, 12:02:03 am »
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Further Maths likes to keep things relatively simple and works on loans or investments where calculations and payments are made at the END of each period. This is the more usual practice in life.
In some instances, in the financial world, there is some advantage for payments to be made at the START of a period. For example, a person taking an investment loan beginning in June might choose to make a payment before the end of June so that a tax deduction can be made in the same financial year (July to June) as the loan was taken. (They might even make this payment on the same day they actually take out the loan. They payment has to be made anyway, so why not do it when you can get a tax break?)
For your needs in Further, consider only interest calculations and payments being made at the end of each period. Therefore, use PMT:END
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