1 of 8 0-day streak

Set up a time-value-of-money calculation

Question 1 of 8

Calculator allowed

Set up a time-value-of-money calculation for the managed income account

The account makes equal withdrawals to the recipient

Payments and compounding occur annually; use 1 period per year

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

The nominal annual rate is 7.2%. The starting account balance is $110,000. The equal withdrawal each period is $9,881. The account balance after the listed periods is $101,267.45. The total time is 4 years; enter the number of payment periods from the stated frequency. Payments and interest are applied at the end of each year

(a)1 mark

Select the field matching the quantity to be determined

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

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

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

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

(b)3 marks

Fill the field entries required before the technology calculation. Use the stated viewpoint and frequency

Finance-technology field	Entry
Number of payments (N)	unknown
Nominal annual rate (I/Y)	enter
Present value (PV)	$110,000
Periodic payment (PMT)	-$9,881
Future value (FV)	-$101,267.45
Payments per year (P/Y)	enter
Compounding periods per year (C/Y)	enter

$C/Y$ $P/Y$ $I/Y$