I tried to solve example 20 on page 286 (Volume I) using BA II plus calculator but i never got the correct answer using multiple approaches… If anyone was kind enough to tell me the key strokes to solve it I would grealty appreciate the answer, as its one of the few poblems in the Quant. that i was unable to solve using the calculator. Edit: I’ll post a abridged/paraphrased version of the example here to ease the process. You want to buy a 120,000 house You made a down payment of 20,000 and borrowing the remainder with 30 year fixed rate mortgage with monthly payments. 1st payment is @ T=1, interest rate =8% with monthly comp. What will the monthly mortgage payment be ?
From information provided above: I/Y: 8/12 PV: $100,000 N: 30*12 --> PMT = $733.78 make sure that: * calculator is at “end” * I/Y is entered as 8/12 and not 0.08/12
Thanks for answering, I was wondering if it was possible to use P/Y and C/Y to solve it ??
it is possible - but recommendation is not to use those P/Y and C/Y - since you could forget to undo them and mess up future TVM problems. Use I/Y = Annual Rate / # of Periods and N= # of years * # of Periods consistently and you will not face issues.
Probably goes without saying, but get in the habit of clearing the TVM keys before doing problems…in a case like this if you had a FV leftover from the last problem it’d throw you off.