Page 73 - CFA - Day 1 & 2 Course Notes
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LOS 6.f: Demonstrate the use of a Session Unit 2: The Time Value of Money
time line in modelling and solving
time value of money problems..
Example: Loan payment calculation: Quarterly payments
Using the loan described in the preceding example, determine the payment amount if the
bank requires the company to make quarterly payments.
Answer: The quarterly loan payment can be determined by inputting the
relevant data and computing the payment (PMT):
N = 5 × 4 = 20; I/Y = 9 / 4 = 2.25; PV = –50,000; CPT → PMT = $3,132.10
