Nper in the FV function:

Question

BlackTom AI · Accepted Answer

To approach this question, I will evaluate each option in turn and relate it to how Nper is defined in the FV function.
Option a: 'is not an argument in the FV function.' This is incorrect because Nper is indeed an argument in the FV function; it specifies how many payment periods occur, so saying it is not an argument misstates the function's parameter list.
Option b: 'is when payments are due.' This is closer to describing the timing concept often expressed by 'when' parameters, but Nper does not indicate when payments are due. Timing of payments is typically addressed by the type argument (end vs. beginning) or the payment schedule, not by Nper itself. Therefore this statement confuses the count of periods with payment timing.
Option c: 'is the total number of payments in the investment period.' This aligns with the standard definition: Nper represents how many payment periods occur over the investment (or loan) horizon. It is the total count of payments that will be made or received.
Option d: 'is the total number of payments required to be made for the loan to be paid back.' While this sounds similar to Nper, it’s overly specific to a loan payoff scenario and can be misleading. In general financial computations, Nper is the total number of payment periods in the plan, not exclusively the exact figure required to pay off a loan under all possible terms. This makes the statement less precise than option c.
Thus, option c provides the accurate and general description of Nper in the FV function, while the other options either mischaracterize the role of Nper or overstate its scope. The distinction hinges on recognizing Nper as the count of payment periods across the entire investment period, not merely timing, not an argument, and not exclusively tied to loan payoff in all contexts.

FNDN Computing for Business 2025 STD O1

Nper in the FV function:

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