calculate with N less than a year on BA II

CFA Level I
#1

is there a way to input period less than a year on BA II?

for example, find the FV of $1000 deposited for 10 months at 5.5% pa.

How can I input the data into BA II without going through 10/12 X 5.5% =4.5833% step.

#2

2nd CLR TVM

PV=-1000 N=10/12 I/Y=5.5% CPT FV

#3

Hi cpk123

can you reconfirm your method, because I already tried the same method before I posted here. It gives compounded instead of simple interest rate.

The correct answer is

Using the input suggested in BA II would give $1045.6276, which is the same as calculating as compound interest

Can you reconfirm?

#4

I don’t think there is a function for simple interest on the TI BA II Plus (Pro). It’s always compound. You will have to do it manually I guess (if you even get such a question on the exam)!

#5

if you use the TI-BA Calc with the TVM functions - it is compounding interest. Not the way you are calculating… which is applicable for LIBOR type rates - and there you have to do the hard yards yourself. (or use the brackets fn.).

#6

wow, you gonna be joking. BA II can’t even do a simple interest.

#7

I finally worked it out.

PV=-1000 N=1, P/Y = 1.2 (m/n=12/10) I/Y=5.5%

N must be 1 because it is simple interest, no annuity, no compounding.

P/Y = 1.2, because when we say compound half yearly, we put P/Y=2 (m/n, 2/1=2) , monthly P/Y=12 (12/1), then 10 months simple interest must be 12/10=1.2

CPT FV = $1045.83 !