Question 4 Of 710Which Of These Groups Of Values, When Plugged Into The TVM Solver Of A Graphing Calculator, Will Return The Amount Of A 25-year Loan With An APR Of 16.8%, Compounded Monthly, That Is Paid Off With Monthly Payments Of 340 ? A . \[ 340?A. \[ 340 ? A . \[ N

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The TVM Solver, a feature found in many graphing calculators, is a powerful tool for calculating various financial metrics, including loan payments, interest rates, and time periods. In this article, we will explore how to use the TVM Solver to determine the amount of a 25-year loan with an APR of 16.8%, compounded monthly, that is paid off with monthly payments of $340.

What is the TVM Solver?

The TVM Solver is a built-in function in many graphing calculators that allows users to solve for various financial metrics, including:

  • Present value (PV): the current value of a loan or investment
  • Future value (FV): the future value of a loan or investment
  • Net present value (NPV): the difference between the present value of a loan or investment and its future value
  • Internal rate of return (IRR): the rate of return on an investment
  • Loan payment (PMT): the monthly payment amount for a loan

How to Use the TVM Solver

To use the TVM Solver, you will need to input the following values:

  • N: the number of payments (in this case, 25 years * 12 months/year = 300 months)
  • I/Y: the interest rate per period (in this case, 16.8%/year / 12 months/year = 1.4%/month)
  • PV: the present value of the loan (this is the value we are trying to solve for)
  • PMT: the monthly payment amount (in this case, $340)
  • FV: the future value of the loan (this is typically 0, as we are not calculating the future value of the loan)

Which Group of Values Will Return the Correct Answer?

To determine which group of values will return the correct answer, we need to consider the following:

  • A: [$ N
  • B: [$ N
  • C: [$ N
  • D: [$ N

Analyzing the Options

Let's analyze each option:

  • A: [$ N
    • This option is missing the interest rate per period (I/Y) and the present value (PV) of the loan.
    • Without the interest rate per period, the TVM Solver will not be able to calculate the correct answer.
    • Without the present value of the loan, the TVM Solver will not be able to calculate the correct answer.
  • B: [$ N
    • This option is missing the interest rate per period (I/Y) and the present value (PV) of the loan.
    • Without the interest rate per period, the TVM Solver will not be able to calculate the correct answer.
    • Without the present value of the loan, the TVM Solver will not be able to calculate the correct answer.
  • C: [$ N
    • This option is missing the interest rate per period (I/Y) and the present value (PV) of the loan.
    • Without the interest rate per period, the TVM Solver will not be able to calculate the correct answer.
    • Without the present value of the loan, the TVM Solver will not be able to calculate the correct answer.
  • D: [$ N
    • This option is missing the interest rate per period (I/Y) and the present value (PV) of the loan.
    • Without the interest rate per period, the TVM Solver will not be able to calculate the correct answer.
    • Without the present value of the loan, the TVM Solver will not be able to calculate the correct answer.

Conclusion

Based on the analysis above, none of the options A, B, C, or D will return the correct answer. The correct answer requires the following values:

  • N: the number of payments (in this case, 25 years * 12 months/year = 300 months)
  • I/Y: the interest rate per period (in this case, 16.8%/year / 12 months/year = 1.4%/month)
  • PV: the present value of the loan (this is the value we are trying to solve for)
  • PMT: the monthly payment amount (in this case, $340)
  • FV: the future value of the loan (this is typically 0, as we are not calculating the future value of the loan)

The TVM Solver is a powerful tool for calculating various financial metrics, including loan payments, interest rates, and time periods. However, many users have questions about how to use the TVM Solver and what it can do. In this article, we will answer some of the most frequently asked questions about the TVM Solver.

Q: What is the TVM Solver?

A: The TVM Solver is a built-in function in many graphing calculators that allows users to solve for various financial metrics, including present value (PV), future value (FV), net present value (NPV), internal rate of return (IRR), and loan payment (PMT).

Q: How do I use the TVM Solver?

A: To use the TVM Solver, you will need to input the following values:

  • N: the number of payments (in months)
  • I/Y: the interest rate per period (in decimal form)
  • PV: the present value of the loan or investment (in dollars)
  • PMT: the monthly payment amount (in dollars)
  • FV: the future value of the loan or investment (in dollars)

Q: What is the difference between the TVM Solver and a financial calculator?

A: The TVM Solver and a financial calculator are both used to calculate financial metrics, but they work in different ways. A financial calculator is a manual tool that requires users to input values and perform calculations manually. The TVM Solver, on the other hand, is a built-in function that performs calculations automatically.

Q: Can I use the TVM Solver to calculate the interest rate on a loan?

A: Yes, you can use the TVM Solver to calculate the interest rate on a loan. To do this, you will need to input the following values:

  • N: the number of payments (in months)
  • PV: the present value of the loan (in dollars)
  • PMT: the monthly payment amount (in dollars)
  • FV: the future value of the loan (in dollars)

The TVM Solver will then calculate the interest rate per period (I/Y) for you.

Q: Can I use the TVM Solver to calculate the present value of an investment?

A: Yes, you can use the TVM Solver to calculate the present value of an investment. To do this, you will need to input the following values:

  • N: the number of payments (in months)
  • I/Y: the interest rate per period (in decimal form)
  • PMT: the monthly payment amount (in dollars)
  • FV: the future value of the investment (in dollars)

The TVM Solver will then calculate the present value of the investment (PV) for you.

Q: Can I use the TVM Solver to calculate the internal rate of return (IRR) on an investment?

A: Yes, you can use the TVM Solver to calculate the internal rate of return (IRR) on an investment. To do this, you will need to input the following values:

  • N: the number of payments (in months)
  • PV: the present value of the investment (in dollars)
  • PMT: the monthly payment amount (in dollars)
  • FV: the future value of the investment (in dollars)

The TVM Solver will then calculate the internal rate of return (IRR) for you.

Q: Can I use the TVM Solver to calculate the loan payment (PMT) on a loan?

A: Yes, you can use the TVM Solver to calculate the loan payment (PMT) on a loan. To do this, you will need to input the following values:

  • N: the number of payments (in months)
  • I/Y: the interest rate per period (in decimal form)
  • PV: the present value of the loan (in dollars)
  • FV: the future value of the loan (in dollars)

The TVM Solver will then calculate the loan payment (PMT) for you.

Conclusion

The TVM Solver is a powerful tool for calculating various financial metrics, including loan payments, interest rates, and time periods. By understanding how to use the TVM Solver and what it can do, you can make informed financial decisions and achieve your financial goals.