1 of 8 0-day streak

Set up a time-value-of-money calculation

Question 1 of 8

Calculator allowed

Use the following scholarship annuity data to prepare the finance-technology fields

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%. The starting annuity balance is $100,000. The equal withdrawal each period is $3,547. The annuity balance after the listed periods is not supplied. There are 10 payment periods over 10 half-years. Payments and interest are applied at the end of each half-year

(a)1 mark

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

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

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

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

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)	10
Nominal annual rate (I/Y)	3%
Present value (PV)	enter
Periodic payment (PMT)	enter
Future value (FV)	unknown
Payments per year (P/Y)	2
Compounding periods per year (C/Y)	enter

$PMT$ $C/Y$ $PV$