1 of 8 0-day streak

Set up a time-value-of-money calculation

Question 1 of 8

Calculator allowed

A periodic cash-flow model describes the community income fund

The account makes equal withdrawals to the recipient

Payments and compounding occur half-yearly; use 2 periods per year

Use the financial institution viewpoint. Cash-flow signs must follow that viewpoint

The nominal annual rate is 3.06%. The starting fund balance is not supplied. The equal withdrawal each period is $7,972. The fund balance after the listed periods is $167,246.50. There are 14 payment periods over 7 years. Payments and interest are applied at the end of each half-year

(a)1 mark

Which standard field is the unknown quantity in this situation?

Nominal annual rate (I/Y) is the field for the nominal annual rate

Present value (PV) is the field for the starting amount

Number of payments (N) is the field for the number of payment periods

Future value (FV) is the field for the balance after all listed payments

Periodic payment (PMT) is the field for the equal payment made each period

(b)3 marks

Record the signed money fields and the integer frequency fields for this model

Finance-technology field	Entry
Number of payments (N)	enter
Nominal annual rate (I/Y)	3.06%
Present value (PV)	unknown
Periodic payment (PMT)	-$7,972
Future value (FV)	enter
Payments per year (P/Y)	2
Compounding periods per year (C/Y)	enter

$N$ $FV$ $C/Y$