Hey guys, I am having a lot of trouble determining what number of periods to use for N. On the practice questions in the qbank, my only errors were using the wrong input values for n. I was not making mistakes for compounding, but more on when to use 9 periods instead of 10. I was usually off by one year. I tried looking in the book for an explaination of how to remember how many periods to count but I was unable to find what I needed. Do any of you guys have any pointers on how to determinet he amount of periods to use when finding the PV or FV of a cash flow. thanks - Erc
If you post up a question I would be happy to try and explain the reasoning behind it.
when you read the problem pay attention to things like when the first payment occurs (ordinary annuity vs. annuity due) and when the last payment occurs relative to the time you are solving for. The best way is to set up the time line outling the cash flows.
I agree with Dapper. Draw a timeline for each problem. Knowing when differnt cash flows occur is crucial to determining which formuals and number of years to use
For the most part if questions say it starts today, then its an annuity due. But yeah give us an example and we would be happy to work through a problem with you dude.