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Unformatted text preview: before you have enough money for the down payment and closing costs? closing 27 27 Number of Periods – Example 2 Number Continued Continued How much do you need to have in the future? Down payment = .1(150,000) = 15,000 Closing costs = .05(150,000 – 15,000) = 6,750 Total needed = 15,000 + 6,750 = 21,750 Compute the number of periods Using the formula t = ln(21,750 / 15,000) / ln(1.075) = 5.14 years Per a financial calculator: PV = -15,000, FV = 21,750, I/Y = 7.5, CPT N = 5.14 years PV 28 28 Quick Quiz – Part IV When might you want to compute the When number of periods? number Suppose you want to buy some new Suppose furniture for your family room. You currently have $500 and the furniture you want costs $600. If you can earn 6%, how long will you have to wait if you don’t add any additional money? any 29 29 Spreadsheet Example Use the following formulas for TVM calculations FV(rate,nper,pmt,pv) PV(rate,nper,pmt,fv) RATE(nper,pmt,pv,fv) NPER(rate,pmt,pv,fv) The formula icon is very useful when you can’t The remember the exact formula remember Click on the Excel icon to open a spreadsheet containing Click four different examples. four 30 30 Work the Web Example Many financial calculators are available online Click on the web surfer to go to Investopedia’s Click web site and work the following example: web You need $50,000 in 10 years. If you can earn 6% You interest, how much do you need to invest today? interest, You should get $27,919.74 31 31 Table 5.4 32 32 5 Formulas End of Chapter 33...
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This document was uploaded on 04/02/2014.

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