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P 5-10 (similar to) :5 Question Help Suppose the interest rate is 9.2% APR with monthly compounding. What is the present valu Please show how to enter this on a financial calculator, specifically the HP10BII+

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Answer #1

rate positively ..

First we have to convert the Monthly compounding rate into effective annual rate and then semiannual compounding rate.
Annual effective rate = (1+9.2%/12)^12-1
Annual effective rate = 9.60%
computation of semiannual compounding rate = ((1+9.6%)^0.5-1)*2
Semiannual compounding rate = 9.38%
We have to use now financial calculator to solve for present value
put in calculator-
FV 0
PMT -105
I 9.38%/2 4.69%
N 5*2 10
Compute PV $823.17
Ans = $823.17
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