Texas Instruments BA II Plus User Manual page 14

Answer 2. What nominal rate, compounded semi-annually, lets you double your capital in
ten years (rounded off)?
a) 6%
b) 7%
c) 8%
d) 9%
e) 10%
The correct answer is b).
Reason:
Sequence of entries
CE/C > 2ND > CLR TVM
2ND > P/Y > 2 > ENTER
CE/C > CE/C
10 > 2ND > xP/Y > N
1,000 > +/− > PV
2,000 > FV
CPT > I/Y
Note: The values of $1,000 and $2,000 were chosen arbitrarily. Any value and double that
amount would have given the same answer.
Answer 3. You are thinking about purchasing a $10,000 bond maturing at par in nine years
with annual coupons at the rate of 7%. How much will you have to pay if you
want a compound annual return of 8%?
a) $4,372.82
b) $9,002.49
c) $9,375.31
d) $10,000.00
e) $10,375.31
Display
0
P/Y = 2
0
N = 20
PV = − 1,000
FV = 2,000
I/Y = 7.052984768
Explanation
Resets the default values.
Enters a semi-annual payment
period.
Exits the entry of the C/Y
variable.
Enters the number of monthly
payments over a 10-year
period.
Enters the present value of the
investment.
Enters the final value of the
investment.
Calculates the semi-annual
interest rate.
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