CFA Level 1: Calculation of Quarterly Payment

Calculation of Quarterly Payment for Debt Retirement

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Question

What quarterly payment is required beginning one period from today to pay off a $4,000 debt, if interest accrues at 8% per year, compounded quarterly, and the debt is to be retired in 5 years?

Answers

Explanations

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A. B. C. D. E.

B

On the BAII Plus, press 20 N, 8 divide 4 = I/Y, 4000 PV, 0 FV, CPT PMT. On the HP12C, press 20 n, 8 ENTER 4 divide i, 4000 PV, 0 FV, PMT. Note that the answer will be displayed as a negative number. Make sure the BAII Plus has the P/Y value set to 1.

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