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 business equipment loan

The borrower makes equal repayments

Payments and compounding occur annually; use 1 period per year

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

The rate for one year is 6.83%. The starting loan balance is $77,500. The equal repayment each period is $14,156. The loan balance after the listed periods is $59,169.17. There are 2 payment periods over 2 years. Payments and interest are applied at the end of each year

(a)1 mark

Identify the field that must be left for the calculation described in the data

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

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

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

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

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

(b)3 marks

Enter the values for the listed fields. Keep the signs and convert the stated time to a payment count

Finance-technology field	Entry
Number of payments (N)	enter
Nominal annual rate (I/Y)	unknown
Present value (PV)	enter
Periodic payment (PMT)	$14,156
Future value (FV)	$59,169.17
Payments per year (P/Y)	enter
Compounding periods per year (C/Y)	1

$PV$ $P/Y$ $N$