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Hi John,
Firstly, thank you so much for all the work you and the Open Tuition team do. 🙂
I have a query regarding slight variances in the answer using the present value table vs. the formula.
For example, in chapter 24, example 6., in the lecture notes, I come to the following answers:
Using the formula: 1200 / 1.13 (to the power of 12) = 276.84
Using present value table: 1200 x 0.231 = 277.20Can I check that I have done the working for this correctly? In an exam, should we be required to enter a numerical value to answer a question, will a range of answers be acceptable in this instance? For instance, would all answers from 276.84 – 277.21 be acceptable / deemed correct? I hope I managed to describe my query clearly!
Thank you again.
Scott
The difference (as I do explain in my free lectures) is due to the fact that the tables are rounded to 3 decimal places.
In the exam then either a range of answers will be accepted, or (and more likely) the question will specifically ask for the answer to be given to the (for example) nearest $10 or nearest $100, etc..
(And, of course, in practice it is irrelevant – nobody is at all worried ever about a difference of a few $’s 🙂 )
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