Doubts

Exercise Set 02- 5b

Exercise Set 02- 5b

by Salvador Valverde R. Azevedo Almeida -
Number of replies: 2
Shouldn't the FV be done with the 2137 and not the 2146?

In reply to Salvador Valverde R. Azevedo Almeida

Re: Exercise Set 02- 5b

by Julio Crego -
Your intuition is not bad. A possible solution is to take the PV as of today and compute the value as

\(2137(1+r_m)^{12} \)

The solution in the excel sheet takes a different approach and directly goes from next month present value

\(2146(1+r_m)^{11} \)

Note that the exponent is different because the present value (2146) is already next month, so we just need to move the value 11 months into the futureĀ