FYI: i’m using the TI-BAII plus. I’m on Reading 58 and DCFs to find the no-arbitrage forward price. There’s obviously two ways to DCF: 1) formula and a lot of number punching 2) TVM function with less number punching I’m trying to use the TVM method as it would save time and possibly errors on the day of the exam. Problems 6 i can obtain the correct answer with both methods. However on problem 8, i can’t seem to get the right numbers with the TVM function. Here’s the correct formula method from the textbook: PV = 40/[1.06^(165/365)] + 40/[1.06^(347/365)] = 76.80 ( 76.80456637 in excel) Here’s my TVM inputs, N = 165, 347 I/Y = 6/365 FV = -40 MY total PV = 76.71212 Can anybody get a closer answer and let me know what i’m doing wrong?
My calculation with BA II Plus Calculator: PV = 40/[1.06^(165/365)] = 38.96 + 40/[1.06^(347/365)] = 37.8444 38.96 + 37.8444 = 76.8044. Subtract from $1,146.92 and future value using 6% = $1,134.32
Thanks for the reply. One question though, did you calculate that with the TVM function?
JaRvEy Wrote: ------------------------------------------------------- > FYI: i’m using the TI-BAII plus. > > I’m on Reading 58 and DCFs to find the > no-arbitrage forward price. There’s obviously two > ways to DCF: > 1) formula and a lot of number punching > 2) TVM function with less number punching > > I’m trying to use the TVM method as it would save > time and possibly errors on the day of the exam. > Problems 6 i can obtain the correct answer with > both methods. However on problem 8, i can’t seem > to get the right numbers with the TVM function. > Here’s the correct formula method from the > textbook: > > PV = 40/[1.06^(165/365)] + 40/[1.06^(347/365)] = > 76.80 ( 76.80456637 in excel) > > Here’s my TVM inputs, > N = 165, 347 > I/Y = 6/365 > FV = -40 > > MY total PV = 76.71212 > > Can anybody get a closer answer and let me know > what i’m doing wrong? Oh, I see what you mean now. You tried to use the TVM function. Yeah, I got exactly the same thing. I don’t think you get any closer.
Yup. Trying to find a simple way to compute on exam day. The manual method makes my head spin, wastes time, and will most likely lead to errors.
I figured it out. The correct inputs should be: N = 165/365 & 347/365 I/Y = 6 FV = -40 My total PVCF = 76.80444 vs the excel answer of 76.80456637. Now that’s a differential i can live with. Thanks for working with me on this, Damil4real. I hope you can use the same method and save yourself some time on the exam as well.
nice method, dude!
Yeah. I’ve been staring at that for an hour thinking there’s gotta be a better way than all that punching. Your post must’ve triggered something in my feeble mind. Good teamwork on that one. Calculator skills are priceless on exam day.