This solution requires four steps:
1.Calculate the present value of the 47 monthly payments: (4 × 12) - 1 = 47.
2.Add the value of the additional advance payment.
3.Find the present value of the buy option.
4.Sum the values calculated in steps 2 and 3.
Step 1
Find the present value of the monthly payments.
Set to Begin mode. Press \¯if BEGIN annunciator is not displayed.
Table | Calculating the present value |
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Keys |
| Display | Description |
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JG\Í | 12.00 | Sets payments per year. | |
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| YjÙ | 47.00 | Stores number of payments. | |
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| GY::yÌ | Stores monthly payment. | ||
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:É | 0.00 | Stores FV for Step 1. | |
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dÒ | 9.00 | Stores interest rate. | |
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| 95,477.55 | Calculates the present value of |
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| 47 monthly payments. | |
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Step 2
Add the additional advance payment to PV. Store the answer.
Table
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| 1vÌy4 |
| payment |
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| 97,877.55 | Adds additional advance. |
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| 97,877.55 | Stores result in M register. |
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Step 3 |
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Find the present value of the buy option. |
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| Table | Calculating the present value of the last cash flow |
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| YgÙ | 48.00 | Stores month when buy option |
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Time Value of Money Calculations 73