Can someone please explain how 0.008392 is derived? I am missing something here.
Take your cost of $2.3 x .55 = $1,265,000 LTV Inputs on HP12c: PV: -1,265,000 N: 300 (25 x 12) I: .75 ( 9% / 12) Solve for PMT: $10,615.83…annualized: $127,390.00 / LTV $1,265,000 = 10.07%, this is your constant. (.55).1007 + (.45).145 = 12.06, letter “B”
OK, I’m confused. Book 5, page 35 - sinking fund factor - uses $1 for future value. Mock exam solution shows the calculation as $1 for present value. When I calcuate the return of capital to lender (see example on page 35) using numbers from question 28 on the mock, I get 0.00089, same number as if I calucated question 28 with $1 for future value. Why does the book show $1 future value and the mock $1 present value?
Thanks. Somehow I always manage to screw this one up.
redleaf Wrote: ------------------------------------------------------- > OK, I’m confused. > > Book 5, page 35 - sinking fund factor - uses $1 > for future value. Mock exam solution shows the > calculation as $1 for present value. When I > calcuate the return of capital to lender (see > example on page 35) using numbers from question 28 > on the mock, I get 0.00089, same number as if I > calucated question 28 with $1 for future value. > > Why does the book show $1 future value and the > mock $1 present value? I also didn’t get the way this was calculated on the mock solution. However, you can get the same answer doing it the way explained in the CFAI text. FV = $1 N = 25 X 12 = 300 I/Y = 9 / 12 = .75 PV = $0 PMT = CPT = .00089 x 12 = 0.0107 Then add the 0.0107 to the stated cost of debt of .09 to get 10.07