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Flip to reveal answersWhat are the TVM solver fields?
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All 8 Flashcards — GDC finance solver
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Question
What are the TVM solver fields?
Answer
N (periods), I% (annual rate as a %), PV (present value), PMT (regular payment), FV (future value), P/Y and C/Y (periods per year).
Question
What is the TVM sign convention?
Answer
Money you pay out (invest) is negative; money you receive is positive.
Question
What do you set P/Y and C/Y to?
Answer
The compounding frequency: 1 annually, 2 half-yearly, 4 quarterly, 12 monthly. N = years × that frequency.
Question
How do you find an unknown interest rate on the TVM solver?
Answer
Enter N, PV (negative), PMT = 0, FV, P/Y = C/Y; leave I% blank and solve.
Question
How do you find how long an investment takes?
Answer
Leave N blank, fill I%, PV (negative), PMT = 0, FV, P/Y = C/Y; solve, then round N up (and ÷ frequency for years).
Question
If P/Y = 12, what units is N in?
Answer
Months — divide by 12 to get years.
Question
Why round N up in 'how long until' problems?
Answer
A part-period hasn't reached the target yet, so you need the next whole period.
Question
When is the TVM solver the quickest method?
Answer
On Paper 2 for any compound-interest problem — especially finding the rate or the time, which are awkward by hand.
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Topic 1.4 hub
Financial applications
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