Question

4 Calculating the Number of Periods For each scenario, calculate the number of periods required to reach the given future value:

Present Value	Periods	Interest Rate	Future Value
$560		6%	$1,389
$810		9%	$1,821
$18,400		11%	$289,715
$21,500		13%	$430,258

Answer 1

1.Information provided:

Future value (FV)= $1,389

Current price= present value (PV)= $560

Interest rate= yield to maturity (I/Y)= 6%

The question is solved by calculating the time of the bond.

Enter the below in a financial calculator to compute the time of the bond:

FV= 1,389

PV= -560

I/Y= 6

Press the CPT key and N to compute the time of the bond.

The value obtained is 15.5898.

Therefore, 15.59 years interest periods remain.

Information provided:

Future value (FV)= $1,389

Current price= present value (PV)= $560

Interest rate= yield to maturity (I/Y)= 6%

The question is solved by calculating the time of the bond.

Enter the below in a financial calculator to compute the time of the bond:

FV= 1,389

PV= -560

I/Y= 6

Press the CPT key and N to compute the time of the bond.

The value obtained is 15.5898.

Therefore, 15.59 years interest periods remain.

2.Information provided:

Future value (FV)= $1,821

Current price= present value (PV)= $810

Interest rate= yield to maturity (I/Y)= 9%

The question is solved by calculating the time of the bond.

Enter the below in a financial calculator to compute the time of the bond:

FV= 1,821

PV= -810

I/Y= 9

Press the CPT key and N to compute the time of the bond.

The value obtained is 9.40.

Therefore, 9.40 years interest periods remain.

3.Information provided:

Future value (FV)= $289,715

Current price= present value (PV)= $18,400

Interest rate= yield to maturity (I/Y)= 11%

The question is solved by calculating the time of the bond.

Enter the below in a financial calculator to compute the time of the bond:

FV= 289,715

PV= -18,400

I/Y= 11

Press the CPT key and N to compute the time of the bond.

The value obtained is 26.41.

Therefore, 26.41 years interest periods remain.

4.Information provided:

Future value (FV)= $430,258

Current price= present value (PV)= $21,500

Interest rate= yield to maturity (I/Y)= 13%

The question is solved by calculating the time of the bond.

Enter the below in a financial calculator to compute the time of the bond:

FV= 430,258

PV= -21,500

I/Y= 13

Press the CPT key and N to compute the time of the bond.

The value obtained is 24.52.

Therefore, 24.52 years interest periods remain.