Lease Liability (PV of Annuity Due)

Exercise ID: tvm-real-008

Exam TrapsAnnuity Due

Description

A company leases a machine for 5 years requiring annual payments of $10,000 starting immediately. The discount rate is 8%. Calculate the PV of the lease liability.

Given Values

I/Y

PMT

-10000

Objective

Calculate PV

Steps

Total 16 steps

Step 1:Open BGN/END mode settings

Key Sequence:

2ndPMT

Before Key Press:

0.00

After Key Press:

END

⏱ 1000ms

Step 2:Change to BGN mode

Key Sequence:

2ndENTER

Before Key Press:

END

After Key Press:

BGN

⏱ 1000ms

Step 3:Return to calculator mode

Key Sequence:

2ndCPT

Before Key Press:

BGN

After Key Press:

0.00

⏱ 1000ms

Step 4:Clear TVM Registers

💡 Always clear TVM before starting a new problem.

Key Sequence:

2ndFV

Before Key Press:

0.00

After Key Press:

0.00

⏱ 1500ms

Step 5:Input N = 5

Key Sequence:

Before Key Press:

0.00

After Key Press:

⏱ 1200ms

Step 6:Store in N

Key Sequence:

Before Key Press:

After Key Press:

N=5.00

⏱ 1000ms

Step 7:Input I/Y = 8

Key Sequence:

Before Key Press:

N=5.00

After Key Press:

⏱ 1200ms

Step 8:Store in I/Y

Key Sequence:

I/Y

Before Key Press:

After Key Press:

I/Y=8.00

⏱ 1000ms

Step 9:Input PMT = -10000

Key Sequence:

PLUS_MINUS10000

Before Key Press:

I/Y=8.00

After Key Press:

-10000

⏱ 2200ms

Step 10:Store in PMT

Key Sequence:

PMT

Before Key Press:

-10000

After Key Press:

PMT=-10000.00

⏱ 1000ms

Step 11:Input FV = 0

Key Sequence:

Before Key Press:

PMT=-10000.00

After Key Press:

⏱ 1200ms

Step 12:Store in FV

Key Sequence:

Before Key Press:

After Key Press:

FV=0.00

⏱ 1000ms

Step 13:Compute PV

Key Sequence:

CPTPV

Before Key Press:

FV=0.00

After Key Press:

PV=43121.27

⏱ 1500ms

Step 14:Open BGN/END mode settings

Key Sequence:

2ndPMT

Before Key Press:

PV=50000.00

After Key Press:

BGN

⏱ 1000ms

Step 15:Change to END mode

Key Sequence:

2ndENTER

Before Key Press:

BGN

After Key Press:

END

⏱ 1000ms

Step 16:Return to calculator mode

Key Sequence:

2ndCPT

Before Key Press:

END

After Key Press:

0.00

⏱ 1000ms

Calculator Display

      0.00

Speed:← →

💡 Press Space to quickly pause/play

⚠️ Common Mistakes and Traps

1.Using END mode (Ordinary Annuity) instead of BGN
2.Treating the first payment as a separate lump sum incorrectly
3.Sign errors on PMT

(Expand the sections to view answers and common mistakes before printing.)

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