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Basic discount factor question

Thread starter #1
From Tuckman second edition. 108+31.5/32=7.125(d.5)+107.125d(1). If d(.5) is . 97557 solving for d(1) is .95247. I multiply ( .97557 x 7.125) then add result to 107.125? Then solve the problem to get d(1) .95247. I only ask because I keep getting around .953 and am I worried I am wrong. Thanks James!
 

David Harper CFA FRM

David Harper CFA FRM
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#2
Hi @JamesVU2000 I just entered it quickly into XLS, see
https://www.dropbox.com/s/pzm876s2kexqrg7/021819-tuckman-2nd-page7.xlsx?dl=0

you want d(1) = (108+31.5/32 - 7.1250*0.97557) ÷ 107.125 = 0.95247, or more exactly b/c 0.95247 is rounded:
d(1) = [ 108+31.5/32 - 7.1250* (101+12.75/32)/103.93750 ] ÷ 107.125 = 0.95247. Note the 108-31 = 108 + 31.5/32. I hope that helps!

P.S., I hope you realize the syllabus is working from Tuckman's 3rd edition ...
 
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