In some TVM calculations, I need to calculate n number of periods.
Lets suppose the question says that a person is currently 24 and expects to retire at 68 with an annual payment of 3000 till retirement.
In such a case what is the Number of periods for that contribution? Should I just take 68-24=44 or should i take 44+1=45 if I include the ending year?
Such a question was in a CFAI mock and I found this part very confusing.
68 - 24 is right.
Why dont we add 1. Are we not including the last year?
Lets suppose the question says that a person is currently 24 and expects to retire at 68 with an annual payment of 3000 till retirement.
person is already 24year and it starts going forward so you subtract 24.
expects to retire at 68. so when he turns 68 he is retired.
payments are till retirement so as soon as he is retired, payments stop. so 68th year doesn’t count so you don’t need to add 1 there.
so its plain 68 -24. i think they’ll make it clear somehow if you have to add or subtract one more year.