Gracie has an offer to buy an item with a sticker price of $5700 by paying $170 a month for 48 months. Which of these groups of values plugged into the TVM Solver of a graphing calculator will give her the correct answer for the interest rate being offered?
A. $N=4 ; 1 \%=; P V=-5700 ; P M T=0 ; F V=170 ; P / Y=1 ; C / Y=12 ; P M T: E N D$
B. $N=4 ; 1 \%=; P V=-5700 ; P M T=0 ; F V=8160 ; P / Y=1 ; C / Y=12 ; P M T: E N D$
C. $N=4 ; 1 \%=; P V=0 ; P M T=-5700 ; F V=170 ; P / Y=1 ; C / Y=12 ; P M T: E N D$
D. $N=4 ; 1 \%=; P V=0 ; P M T=-5700 ; F V=8160 ; P / Y=1 ; C / Y=12 ; P M T: E N D$

Question

danjohnbrain · Answer

To solve the problem of determining the correct inputs for the TVM (Time Value of Money) Solver on a graphing calculator, we need to identify the correct values for each parameter: 
 
 N: This refers to the total number of payments. Gracie is making monthly payments for 48 months, so on a graphing calculator, this should be set to 48, not any other number like 4. 
 
 I%: This is the interest rate per year, which is what we are trying to find by using the TVM Solver. 
 
 PV (Present Value): This is the current value or principal of the loan. Since Gracie is taking a loan of $5700, PV should be -5700 (negative because it is an outflow from her perspective). 
 
 PMT (Payment): The regular payment amount is $170. These payments are made at the end of each period, so this will not be zero. 
 
 FV (Future Value): Since Gracie will have paid off the loan at the end of 48 months, the FV (balance at the end) should be 0. 
 
 P/Y (Payments per Year): Payments are monthly, so this should be set to 12. 
 
 C/Y (Compounding Periods per Year): This is usually the same as P/Y unless specified otherwise, so it should be set to 12. 
 
 PMT: END: This typically means that payments are made at the end of each period, which is standard.

Based on these explanations, let's see which of the choices fits: 
 
 Option A: It uses incorrect values like N=4, PMT=0, and does not sum the monthly payments correctly. 
 
 Option B: Still wrong N=4, incorrectly suggests a future value of $8160, which is total payments, not FV. 
 
 Option C & D: Incorrectly switch roles of PMT and FV and incorrect period count.

Given the information, none of the options provide the correct configuration for the TVM Solver with 
 PV = -5700, 
 PMT = 170, 
 FV = 0, 
 N = 48, 
 P/Y = 12, 
 C/Y = 12. 
 The closest interpretation (though none match perfectly) requires different TVM Solver inputs that are not in the choices. This highlights a mismatch between problem description and options.

Answer (1)

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