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Date Posted: 01:09:58 10/15/01 Mon
Author: Juan
Subject: Re: Chapter #8 (End of Chapter Problem# 17)
In reply to: Finance student 's message, "Chapter #8 (End of Chapter Problem# 17)" on 04:21:43 10/11/01 Thu

First, I found the present value of the cash flows.

You could find present value a couple of different ways.I used the cash flow function.

Cash flow method
Press CF
CFo = 100
C01 = -100
F01 = 1
Press NPV
I = 3, because 6% interest is compounded semi-annually
CPT NPV
NPV = 2.9126

Now find the future balance after 20 years.

Be careful, you have to make a decision on how you are going to use the interest rate.

I = 3%, every six months; therefore N = 40.
Or, I = effective interest rate = 6.09%; therefore N = 20.

PV = -2.9126 PV = -2.9126
PMT = 0 PMT = 0
I/Y = 6.09 I = 3
N = 20 N = 40
CPT FV CPT FV
FV = 9.5 FV = 9.5

>I'm having the same problem as the previous person.
>How do I work out (end of chapter problem) # 17 on
>page 254 with the calculator?
>
>P.S. Just wanted to say that the conference room is an
>great idea!

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