CFA CFA Level 1 The Time Value of Money – Calculator Problems

The Time Value of Money – Calculator Problems

  • This topic has 4 replies, 3 voices, and was last updated Jan-18 by policedog.
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    • KBaltazar
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      Hello,
       My calculator is giving me a different answer from the book. I am using a Texas Instruments BA II Plus.

      Answer in the book

      €100,000 = €35,000[1 + (0.05/12)]12N so 12N = 252.48 months
      How I calculate the answer
      (ln(100000/35000))/ln((1+(0.05/12)))= 12N

      But I do it separately in the calculator please let me know if I am wrong

      ln(100000/35000) = 1.05
      ln((1+(0.05/12)) = 0.04

      1.05/.04 = 26.25

      Someone please help I don’t know what I’m doing wrong with this calculator. Something tells me it’s easy but my brain doesn’t want to cooperate today lol.

    • policedog
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      Hey @KBaltazar‌ 

      Your equations are right, but you seem to be miscalculating ln(1+0.05/12), which should be closer to 0.004, not 0.04. 

      ln (100000 / 35000) / ln (1+0.05/12) = 252.48 (I used google, don’t have my calc with me)

    • KBaltazar
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      Hi @policedog

      OMG i see my problem my calculator was only set to two decimal places so it cut off my answer. I set it too 5 so I can see everything now. I hate this calculator I have no idea how to use it but i really appreciate your advice and help thanks so much.

    • Sophie Macon
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      Hey @KBaltazar‌, have you seen our BAII plus calculator guide post

      Passed Tense also has a good summary video of how to use BA II plus to perform some basic calculations required by the CFA. Hope this helps!

    • policedog
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      No problem @KBaltazar‌!

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