Question
PV = 1000 N 10 years R = (1st 5 yrs) = 6.5% annual compounding R = (last 5 yrs) = 6.5% monthly compounding N
PV = 1000 N 10 years
R = (1st 5 yrs) = 6.5% annual compounding
R = (last 5 yrs) = 6.5% monthly compounding
N = 5 N = 60
I/Y = 6.5 I/Y = .54167
PV = 1000 PV = 1370.09
PMT = 0 PMT = 0
FV = 1370.09 FV = 1894.58
TI = FV - PV TI1 = 1370.09 - 1000 = 370.90
= 1894.58 - 1000 TI2 = 1894.58 - 1370.09 = 524.99
= 894.58
SI1 = 1000 x .065 x 5 = 325
SI2 =1000 x .065 x 5 = 325
SI = 325 + 325 = 650
IFC = TI - SI IFC1 = 370.09 - 325.00 = 45.09
= 894.58 - 650.00 IFC2 = 524.49 - 325.00 = 199.49
= 244.58
(244.58 = 45.09 + 199.49)
(199.49 = 141.68 + 57.82)
The 199.49 is also broken down into two (141.68 + 57.82). I have the answer, I need to know the steps on how he came up with that answer.
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Financial Markets And Institutions
Authors: Frederic S. Mishkin, Stanley G. Eakins
7th Edition
013213683X, 978-0132136839
