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The Time Value of Money - Calculator Problems
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.
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Comments
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)
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.
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!