Question 1
Multiple ChoiceA financial agreement pays €1,500 per month for 6 years, with the first payment made immediately. Assuming a 6.5% annual discount rate, compounded monthly, the present value of the contract is closest to:
Explanation
This is a present value of an annuity due, because the first payment is made immediately.
BA II Plus Calculator Steps:
Press 2nd → PMT to set calculator to Begin Mode (annuity due):
2nd → BGN → 2nd → SET → (should show BGN in screen corner) → 2nd → QUIT
Press 2nd → FV to clear time value entries.
Input:
N = 72 (6 years × 12 months)
I/Y = 6.5 ÷ 12 = 0.5417
PMT = -1500
FV = 0
Press CPT → PV
PV = €101,157