Dick Schwanke Finite Math 111 Harford Community College Fall 2015

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1 Using Technology to Assist in Financial Calculations Calculators: TI-83 and HP-12C Software: Microsoft Excel 2007/2010 Session #4 of Finite Mathematics 1 TI-83 / 84 Graphing Calculator Section 5.5 of textbook discusses recursive sequences TI-83 can do these: see PDF file of 6.5 linked from course lecture page /Data_sets/ch06_TI-83.pdf This material is not going to be tested How many of these calculator functions to use is your choice at your risk 2 TI-83 / 84 Graphing Calculator Details of more financial at TI website, see chapter 14 of guidebook phing/83p/83m$book-eng.pdf Functions of interest APPS ENTER select FINANCE from menu select TVM (time value of money) enter, input all known values, with (-) for PMT, move cursor to unknown value press ALPHA SOLVE 3 Chapter 6; Using Excel for Financial Calculations Page 1 of 5

2 HP-12c Calculator Storage registers specifically for n, i, PV, PMT, and FV Know any couple, can get all others Functions of multiply by 12 and divide by 12 direct to register contents HP website has detailed instructions, e.g.: product= About Microsoft Excel Is a spreadsheet with multiple pages Columns by letter Rows by number Cells by letter-number location Helps keep numbers organized Power is in the built-in functions To use a function Select a cell for the answer Type function / formula, beginning with = Can use numbers or cell locations 5 About Microsoft Excel Useful functions (for chapter 5) begin at Formulas then select Financial See Function Description handout Eight functions of particular use to us PV Returns the present value of an investment RATE Returns the interest rate per period of an annuity 6 Chapter 6; Using Excel for Financial Calculations Page 2 of 5

3 Functions in Microsoft Excel Eight functions of particular use FV Returns the future value of an investment based on periodic constant payments and a constant interest rate IPMT Returns the interest payment for an investment for a given period NOMINAL Returns the annual nominal interest rate 7 Functions in Microsoft Excel Eight functions of particular use NPER Returns the number of periods for an investment PMT Returns the periodic payment for an annuity PPMT Returns the payment on the principal for an investment for a given period 8 Examples of Microsoft Excel Funding a loan: Example 11, page 323 Start with textbook provided data Use PV function Use FV function Expand to full payment schedule Home Mortgage Payments: #7, p. 335 Pricing a bond: Example 12, page 338 Start with textbook provided data Use PV function Expand to full payment schedule 9 Chapter 6; Using Excel for Financial Calculations Page 3 of 5

4 Problems using Microsoft Excel Student technology project #1: Page 327, #31, sinking fund payment Page 344, #49, corporate bond Page 351, #29, house mortgage, make a 25 year / 300 month schedule showing: Date of each monthly payment Interest paid that month Interest paid year to date (reset in Jan.) Current equity in home each month Project due by class #6, 17 September 10 Use examples from class on instructor s website - both straight book & modified Sinking fund problem: Use the PMT function & FV function Column headers will be: Payment Number Sinking Fund Deposit Cumulative Deposits Accumulated Interest Total Amount Due Date 11 Corporate bond problem in four steps: Calculate semi-annual interest payments Calculate present value of semi-annual payments Calculate present value of the bond at maturity Calculate the price of the bond by summing the results of steps 2 and 3 12 Chapter 6; Using Excel for Financial Calculations Page 4 of 5

5 Home mortgage problem - make a schedule Date of each monthly payment (all 360 ) Interest paid that month Interest paid year to date (reset in Jan.) Current equity in home Note all were previously manually done as homework problems Learning Center can assist with Excel 13 Concluding Chapter 6 Review on bottom of page 349 Lists types of problems to solve Gives number of related review exercise Important formulas top of page 350 Root of all formulas (p. 295) I = Prt Amount (p. 296) A = P + I = P(1+rt) Five other formulas In class quiz: open book / open notes 14 Notes of the Day 1. Excel examples to be posted Page 322, #10-11: Find Annuity Amount Page 333, #6-7: Home Mortgage Page 339, #11-12: Find Present Value 2. Problem numbers for Excel Technology Assignment #1 are: Page 327, #31: Sinking Fund Payment Page 344, #49: Corporate Bonds Page 351, #29 plus: Home Mortgage 3. Learning Center knows of examples and project (and due date of 17 Sept) 15 Chapter 6; Using Excel for Financial Calculations Page 5 of 5

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