btcapital

Hi. I did this morning session last night (and this problem, etc.).

The way to think about it is in 2 segments.

0 Yrs -------- 5 Yrs (Payments begin) --------------------------- 15 Yrs (Payments end).

I start with second segment and calculate the value of an annuity into my TI BA II Plus.

N=10 Yrs.
PV=0 (he will have no money left after the $10,000 payments end)
PMT = $10,000
INT = 14%
Solve for PV (how much money he needs at start when these payments begin).

Then I take that # and discount it back 5 years (1.14^5) to get the number for today.

How did you do on this practice exam?