Finding deposit

S

Sue0113

Junior Member
Joined
Feb 1, 2012
Messages
114
What deposit made at the beginning of each month will to 36,000
at 5% compounded quarterly at the end of 8 years?
FV=36000 i/y=5 n=(8)(4)=32 P/Y=12 C/Y=4
I'm looking PMT
So I put this in calculator and I get 1049.94
what is wrong?
 
How did you put it in your calculator?

Monthly Payments vs. Quarterly Compounding. This should raise red flags. You have to fix this problem.

Annual Interest: 0.05
Quarterly Compounding: 0.05 / 4 = 0.0125
Monthly Payments: 1.0125^(1/3) - 1 = 0.004149425123254282824 -- You pick the number of decimal places.

Now, try again and state EXACTLY what you put in that calculator if yours.
 
using financial calculator

36000=fv 5=i/y 32=n 12=p/y 4=c/y
I was told using financial calculater you did not have to finf periodic rate.
I'm looking for payment.
 
Well, that depends on the financial calculator and whether you are telling it the right problem. What sort of calculator are you using? Make and Model.

I'm not seeing how you worked in the correct monthly interest rate: 0.004149425123254282824

No calculator will substitute for your own ability to disect the problem.
 
Last edited:
answer I got

36000=PMT[(1.004149^96-1)/.004149](1.004149)
36000=pmt(117.638106)(1.004149)
36000=pmt(118.126236)
36000/118.126236
pmt = $304.76
The deposit made at the beginning of each month is $304.76
 
Excellent. We have the right answer. The trick now is to get that out of the calculator.

Sorry, if some of these are obvious. I have to ask.

First, are you sure it is set for "Beginning of Period", rather than "End of Period"?

Second, did you clear the TVM solver before you started? Sometimes a previous problem leaves artifacts. In any case, I would deliberately enter PV = 0 for this type of problem.

Third, are you remembering that PMT and FV/PV have opposite signs? This is sometimes confusing.

Fourth, I'm nervous about the relationship between p/y and c/y. After resetting, you should get p/y = c/y = 1. Do you?

After entering p/y = 12, c/y should have changed to 12, also. Did it?
After entering c/y = 4, p/y should still be 12. Is it?

Fifth, and finally, are you counting the right number of payments. You have 8 years, 8*4 = 32 compounding periods, and 8*12 = 96 payments. I'm leaning toward the 96, not the 32.
 
p/y and c/y

I have to set p/y and c/y before I start the problem, I also have to turn on the begin mode and end.
Thanks for the help.
 
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