# Solve Annuities Questions: BA II Plus Calculator

• MHB
• Aleckand9
In summary: Ah, alright. Thanks, just another question but how would I determine when the problem is END or BGN? I'm a bit confused about this concept.When you calculate the problem, you need to determine if the present value is greater or less than the initial investment. In this case, the present value is greater, so the problem is END.
Aleckand9
Hi, I'm currently stuck on two questions and don't quite understand how I would solve them. We're using BA II Plus calculators.

The first question is

You purchase a 32,500 dollar ring by making a 30% down payment and financing the rest with monthly payments, at the end of the month over 3 years at an interest rate of j2=8.2%. Calculate the size of the monthly payments and the cost of financing. So, I would need to calculate PMT.

I wrote N=3*2=6, I/Y=8.2, P/Y=12, C/Y=2, PV=30% of 32500=9750, FV=32500.
However when I calculate PMT, I don't get the correct answer. Not sure which part I'm getting wrong and how would I calculate the cost of financing?

The second question is

You lease equipment to other companies. You have an older crusher for metals available, and two offers to lease it from you. Offer A is to lease the machine for 8 years and pay 7,500 dollars per month, starting immediately. The second offer, Offer B. is to lease the machine for 3 years and pay 5,500 dollars per half-year, starting immediately.
The second offer is for a heavier use project, and both offers will "use up" the crusher, and you expect the crusher will be worthless after either offer is over.

In this case, you decide to evaluate offers by comparing the present value of the payments (at the beginning of the lease). Calculate the present value of the offers and choose the best one. Your accountants tell you to evaluate the payments using their standard rate of 22% effective. Find the present value for each option.

For this question, I wrote:
A) N=8*1=8, I/Y=22%, P/Y=12, C/Y=1, PMT=7500, FV=0, to find the PV. I did the same for B) with the numbers changed but still didn't get either answers correct. Again, not sure if I'm missing a step or if I have to do something beforehand.

Aleckand9 said:
Hi, I'm currently stuck on two questions and don't quite understand how I would solve them. We're using BA II Plus calculators.

The first question is

You purchase a 32,500 dollar ring by making a 30% down payment and financing the rest with monthly payments, at the end of the month over 3 years at an interest rate of j2=8.2%. Calculate the size of the monthly payments and the cost of financing. So, I would need to calculate PMT.

I wrote N=3*2=6, I/Y=8.2, P/Y=12, C/Y=2, PV=30% of 32500=9750, FV=32500.
However when I calculate PMT, I don't get the correct answer. Not sure which part I'm getting wrong and how would I calculate the cost of financing?

Surely if the payments are monthly over 3 years then N = 3*12 = 36.

Also the PV is not 30% of 32 500, it's 70% of 32 500 = 22 750, and the FV is 0 because you want it paid off.

Prove It said:
Surely if the payments are monthly over 3 years then N = 3*12 = 36.

Also the PV is not 30% of 32 500, it's 70% of 32 500 = 22 750, and the FV is 0 because you want it paid off.
Ah, alright. Thanks, just another question but how would I determine when the problem is END or BGN? I'm a bit confused about this concept.

## 1. How do I use the BA II Plus calculator to calculate annuities?

To calculate annuities using the BA II Plus calculator, you will need to input the following information: the interest rate, the number of periods, and the periodic payment amount. Press the "PMT" button and enter the payment amount. Then press the "I/Y" button and enter the interest rate. Finally, press the "N" button and enter the number of periods. Press the "CPT" button and then press the "PV" button to calculate the present value of the annuity.

## 2. What is the difference between ordinary annuities and annuities due?

Ordinary annuities have payments that are made at the end of each period, while annuities due have payments made at the beginning of each period. This means that the first payment for an ordinary annuity will be made after one period, while the first payment for an annuity due will be made at the beginning of the first period.

## 3. How do I calculate the future value of an annuity using the BA II Plus calculator?

To calculate the future value of an annuity using the BA II Plus calculator, you will need to input the following information: the interest rate, the number of periods, and the periodic payment amount. Press the "PMT" button and enter the payment amount. Then press the "I/Y" button and enter the interest rate. Finally, press the "N" button and enter the number of periods. Press the "CPT" button and then press the "FV" button to calculate the future value of the annuity.

## 4. How do I calculate the present value of an annuity due using the BA II Plus calculator?

To calculate the present value of an annuity due using the BA II Plus calculator, you will need to input the following information: the interest rate, the number of periods, and the periodic payment amount. Press the "PMT" button and enter the payment amount. Then press the "I/Y" button and enter the interest rate. Finally, press the "N" button and enter the number of periods. Press the "CPT" button and then press the "PV" button twice to calculate the present value of the annuity due.

## 5. How do I use the BA II Plus calculator to calculate the number of periods in an annuity?

To calculate the number of periods in an annuity using the BA II Plus calculator, you will need to input the following information: the interest rate, the present value, and the periodic payment amount. Press the "PV" button and enter the present value. Then press the "PMT" button and enter the payment amount. Finally, press the "I/Y" button and enter the interest rate. Press the "CPT" button and then press the "N" button to calculate the number of periods in the annuity.

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