tianxin

redleaf Wrote:
-------------------------------------------------------
> OK, I'm confused.
>
> Book 5, page 35 - sinking fund factor - uses $1
> for future value. Mock exam solution shows the
> calculation as $1 for present value. When I
> calcuate the return of capital to lender (see
> example on page 35) using numbers from question 28
> on the mock, I get 0.00089, same number as if I
> calucated question 28 with $1 for future value.
>
> Why does the book show $1 future value and the
> mock $1 present value?


I also didn't get the way this was calculated on the mock solution. However, you can get the same answer doing it the way explained in the CFAI text.

FV = $1
N = 25 X 12 = 300
I/Y = 9 / 12 = .75
PV = $0
PMT = CPT = .00089 x 12 = 0.0107

Then add the 0.0107 to the stated cost of debt of .09 to get 10.07