2016 Morning Session 6C

Hi fellows

I wonder whether I could use the following input on calculator:

N=10 PV=-700000 PMT= -72000 FV= 2610264

CPT I/Y= 8.29%

the answer gives 8.09% where it use monthly Nr and N=20

I see no difference between the two methods, any ideas?

many thanks!

What is the purpose of showing your calculation and inputs? To show understanding.

Your inputs (let alone your comment that you see no difference) clearly show your answer is conceptually wrong.

My guess is out of 7 marks they deduct 2 for wrong answer and 2-3 for wrong inputs.

can you pls tell me where is wrong?

is it because of “monthly installment”? so we need to use monthly Nr.?

If says directly as use monthly CF distributions upon instruction or indirectly as somewhere in case is stated the facts which show monthly distributions, then you should use monthly CF streams. Don’t forget to annualize this at the end of calculation.

I don’t agree. Show always calculations and there is significant chance to earn partial credit event the total output is incorrect.

There is no penalty (negative) points and the worst outcome for you is left with zero points. Showing calculations reduces the probability of zero points, does not increase this probability.

thx a lot!

wish u to ace the exam!

I believe the ‘Note’ at the end says ‘assume monthly cash flows’. Must apples-to-apples the timing aka multiple N by 12, divide I/Y by 12, etc…