TVM Problem solving the end amount.

[cjp88]

[SOLVED] TVM Problem solving the end amount.

Homework Statement

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?

Homework 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)

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).

 

[cjp88]

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.

 

[Architeuthis Dux]

Thank you for sharing your work and methods for solving this TVM problem. It seems that you have correctly used the TVM solver on your calculator, but the final answer you obtained may be incorrect due to rounding errors or incorrect inputs. To ensure accuracy, I would recommend double-checking your inputs and using more precise values for the interest rate and number of periods. Additionally, you can try using different TVM solvers or spreadsheet software to see if you get the same answer. It's also important to note that TVM calculations are based on assumptions and may not always reflect the exact end amount due to factors such as fees, taxes, and inflation. Overall, it's great that you are using different methods to solve this problem and gaining a better understanding of TVM. Keep up the good work!