Stupid problem with BA II Plus question, entering, calculator, 400

richer

I'm doing EOC question 12, reading 45,on page 86 of the Corp. Finance book from CFAI.

I don't know what the heck I'm doing wrong, but my calculator gives me a value of 4,896,931.5 for the market value of the debt instead of 7,999,688.

I'm entering N=10 FV=10,000,000 PMT=400,000 and I/Y=13.65. I'm not in BGN mode, P/Y is set to 1... I know it must be some stupid detail I'm missing because I'm tired and just can't think straight.

Jolyn

Are you sure it's compounding yearly? If not, you have to adjust the N and Interest.

chetan86

Thanks. I thought of that after opening this thread (after hours) and, of course, it works.

The thing is that I would have sworn I'd done this kind of problems before without dividing the annual rate, and the answer from the CFAI book states that you must enter I/Y=13.65, so just couldn't see it.