Find the present value of $3000 due in 5 years and 6 months if money is worth 4.5% compounded quarterly.
P1: I tried:
P/Y = 1
N = 5.5 x 4= 22
FV = 3000
I/Y = 4.5 / 4 = 1.125
CPT PV ==> -2345
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P2: I tried:
P/Y = 4 and C/Y = 4
N = 5.5
FV = 3000
I/Y = 4.5
CPT PV ==> -2820
What ?!?!!
How can this happen?
3000/(1+0.045/4)22 = 2,345.489 
3000/(1+0.045/4)5.5 = 2,820.98 
Under P1, your calculator will automatically set C/Y=1. So you end up with 22 compounding periods at 1.125% per period. Under P2, N has to be 22, not 5.5.
Thank you so much.
For second try you need to use the annualised rate. 1.125 annualised to 4.5765 and use N =5.5.
Compounding at 4.5765% annually is algebraically equivalent to compounding at 4.5% quarterly. 