PV of a single sum example

CFA Level I Quant
#1

I need help with calculating PV of a single sum in this example:

Given a discount rate of 10%, calculate the PV of a $200 cash flow that will be received in 2 years.

Answer:

N = 2 ; I/Y= 10; FV = 200; CPT-> PV = $165.29

I followed those exact steps in my BAII but the answer I’m getting is $190.30… :no_mouth:

Can someone let me know what I am doing wrong and why my answer is coming out differently even though I’m following the above steps in the book !

Thanks!

1 Like
#2

Did you make sure that your PMTs are set at 0?
You can also just reset your TMV (2ND + CLR TVM) in order to have your PMTs set at 0.

1 Like
#3

I figured out the issue, thank you for your help! :smiley:

#4

. . . which was . . .?

You can’t leave people hanging like this.

#5

I think I figured out what the issue might have been.
P/Y must be set to 1, otherwise you get the wrong value
This is yet another example why it’s almost always a good idea to keep P/Y = 1

2 Likes
#6

I’m going to add this to the calculator tips thread.

@not_a_CFA : :+1: :medal_sports:

#7

These inputs look correct. If P/Y=C/Y=1, then you will get 165.29.