calculate the PV of this annual pay Eurobond 100,000 par value 7% coupon YTM = 8.6 N = 10 PV = ? why do we set FV = 100 rather than FV = 100,000

answer = 89.548 = (89.548/100) * 100,000 = 89548

pacmandefense Wrote: ------------------------------------------------------- > why do we set FV = 100 rather than FV = 100,000 Because it’s faster to type on the calculator. It really doesn’t matter as long as you keep in mind that the unit (shown on the calculator) are thousands

pacmandefense Wrote: ------------------------------------------------------- > answer > > = 89.548 > = (89.548/100) * 100,000 > = 89548 That’s correct

Actually, we you see 89.548 on the calculator (keeping in mind that units are thousand), you can mentally translate it (move the come by 3 decimals) into 89,548 without any calculation

if i punch in fv = 100,000 i get PV =-43,868 how do i adjust for the correct answer?

you need to make the payment 7,000, fv 100,000

ilvino Wrote: ------------------------------------------------------- > you need to make the payment 7,000, fv 100,000 wow i’ve had quite a lapse since level 1. LOL

haha no worries pacman. There are times I wish I had just passed LI in December so this kind of junk would be more fresh in my head.