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Homework Help: TVM Problem solving the end amount.

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  1. Oct 30, 2007 #1
    [SOLVED] TVM Problem solving the end amount.

    1. The problem statement, all variables and given/known data

    2. A spreadsheet software or TVM solver on a calculator can be used to determine the equal monthly payments that can be paid from an annuity for a set length of time. You can enter different payments until you find the one that gives a closing balance of less than $1 after the set length of time. What monthly payment can be paid from an annuity of $100 000 earning 6.5% per annum, compounded monthly, with a life of 10 years?


    2. Relevant equations

    TVM Solver:

    N = (Number of payment periods)
    I% = (Annual Interest rate)
    PV = (Present value)
    PMT = (Payment, must be -number)
    FV = (Future value)
    P/Y = (Payment periods per year)
    C/Y = (Compounding periods per year)


    3. The attempt at a solution

    I did this question in Excel and got under $1, however I'm trying to send this answer with work from Excel done and TVM so I understand both ways to do this question. I'll show my excel file in an attachment.

    In the TVM solver I'm using on my TI-83 Plus I cannot seem to get the same results.

    N = 120.00
    I% = 6.50
    PV = 100000.00
    PMT = -1344.89
    FV = (To be solved)
    P/Y = 12.00
    C/Y = 12.00

    When solved, FV = 35265.34 (Which is wrong.)

    In my excel file, the answer should be $0.24 after the 10 years (120 months).
     

    Attached Files:

  2. jcsd
  3. Nov 2, 2007 #2
    The problem has been solved. I mis-understood the question when doing the TVM Solver.

    I was supposed to put 0 for FV, not what I got from my Excel answer, then use the solve for PMT.
     
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