There is an issue with my calculator as I am not getting the same answer as the answers. Any idea what could be wrong?
Answers say: Market Value of Debt: FV = $10 000 000, PMT = $400 000, N = 10, I/YR = 13.65%. Solving for PV gives $7 999 688.
When I compute it, I get PV = $4 896 931
Any ideas what is wrong with my calculator (BA 2 Plus).
Thanks!
Just did same equation input and . i got $4 896 931 as well.
The problem could be that you have to solve the PV for a semiannual cupon bond, in this case I/Y is 13,65/2 compute PV and you get the right answer
Check your P/Y and C/Y settings: if P/Y=C/Y=1, then the calculator will produce $4,896,931. For P/Y=C/Y=2, then you will get $7,999,688.
Thanks all. Yes, the settings were set to 1. I should have divided the P/Y rate by 2 to get the semi annual rate or set the P/Y C/Y to 2.