The Future Value function =FV(.08/4,1.5*4,0,-1000) can also be written as =FV(.08/4,1.5*4,-1000)

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BlackTom AI · Accepted Answer

The question asks whether the Excel/financial function call =FV(.08/4,1.5*4,0,-1000) can also be written as =FV(.08/4,1.5*4,-1000).
First, recall the FV function syntax: FV(rate, nper, pmt, [pv], [type]). The required arguments are rate and nper, while pmt is the periodic payment, and pv is the present value (optional in the sense of defaulting to 0 if omitted). In the first expression, the arguments are rate = 0.08/4, nper = 1.5*4 = 6, pmt = 0, and pv = -1000. This configuration means there is no periodic payment, but there is a present value of -1000, which will grow to some future value according to the interest rate.
Now consider the second form: =FV(.08/4,1.5*4,-1000). Here the third argument is -1000, which Excel interprets as pmt, not pv, because the function is receiving only three positional arguments. Therefore pmt = -1000, while pv would default to 0 (since it is omitted). Consequently, the resulting future value will reflect a constant payment of -1000 per period, not a present lump-sum contribution of -1000 at time 0. These are two different scenarios, so the results are not equivalent.
In short, equating the two expressions ignores the distinction between the pmt and pv parameters in the FV function. The first uses pmt = 0 and pv = -1000, while the second assigns -1000 to pmt with pv implicitly 0. This mismatch in parameter mapping makes the statements unequal.
Option analysis:
- True: This would imply both forms yield the same FV, which is incorrect because the second form interprets -1000 as pmt due to positional argument rules, changing the meaning of the inputs. This option fails to acknowledge how the arguments are assigned.
- False: This is the accurate assessment because the two syntaxes are not equivalent; the presence of a nonzero pv in the first form versus a nonzero pmt in the second form leads to different results. The distinction between pv and pmt is the critical point that invalidates their equivalence.
Thus, the claim in the question is false because parameter positions determine whether -1000 is treated as a present value or as a periodic payment, and these yield different future values.

CSE 2111 SP2025 (7144) Carmen Quiz 8 - Chapter 8 - Financial Functions

The Future Value function =FV(.08/4,1.54,0,-1000) can also be written as =FV(.08/4,1.54,-1000)

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