Financial caculator

[Han03]

Where is cpt?

When i need to find out pv.

my friend's caclulator shows that 666633

and mine showed 922926

( n-6 i/y-7 pmt-42000 fv-70000)"

My professor said n-6, i/y-7 pmt 42,000 fv-70,000 and press cpt and pv but I can't find cpt

[BartdB]

Hi,

The key referred to as "cpt" on some financial calculators is the "compute" key.

This is not found on HP financial calculators as it computes automatically as soon as you press the key for which you want the answer.

However, looking at your problem:

From the data provided, I have to make some assumptions:

Payments are per month, thus N=6  means six monthly payments

There are 12 payments per year, thus I/YR=7 and the calculator will set interest per month = 7/12 = 0.5833

The FV of 70,000 is what is still owing on the loan after 6 payments of 42,000

Thus:

P/YR =12

N = 6

PMT = -42,000  (negative because it's money we are paying (going out of our pocket))

FV = -70,000   (negative because it's money we are going to have to pay to finish the loan (going out of our pocket))

I get a result of PV = 314,533.25

Of course If any of the assumptions are incorrect, the answer will be different.

(e.g. if N=6 means 6 years @ 12 payments per year, then the PV = 1,211,627.49)

EDIT: actually if it's for 6 years @ 12 payments per year, then N = 6x12 = 30.

There is also the possibility of 6 annual payments, i.e. N = 6 and P/YR = 1 which will give yet another answer.

So it's important to understand all the aspects of a problem.

Hope this helps,

Regards.

[Han03]

the question is

On july1 2016 A company issesd 700,000 of 12% bonds, dated July 1. Interest of 42,000 is payable semiammunaly on June 30 and Dec 31. THe bonds matures in theee years, on 30 June 2019. THe market interest rate for bonds of similar risk and maturity is 14%. The entire bond issue was purchased by United intergroup, Inc.

Interest    42000*4,76654 = 200195

principal face 700,000*0.66634 = 466438

present value of the bond is 666,633 

I have to get the present value using my caculator, how can i get that number?

[BartdB]

Hi,

Yes, if we use 700,000 for FV, also the payments are semi-anually at 14% per annum:

Thus:

I/YR = 14

P/YR = 2  (PMT is semi-anually, thus 2 per year)

N = 6

PMT = 42,000  (positive as it is money you get from the bond)

FV = 700,000   (positive as it is money you get from the bond at the end)

solve for PV = -666,634.22 (negative because you pay thus to buy the bond)

(to set P/YR, enter number and set it using orange shift on the PMT button)

EDIT:

Note 7% would be the interest for 1 period, so you could use 7% at 1 P/YR and it will yield the same result.

Regards.