# Using Financial And Business Calculators. Daniel J. Borgia

Save this PDF as:

Size: px
Start display at page:

## Transcription

1 Using Financial And Business Calculators Daniel J. Borgia August 2000

2 Table of Contents I. Texas Instruments BA-35 SOLAR II. Texas Instruments BAII PLUS III. Hewlett Packard 12C IV. Hewlett Packard 17BII.. V. Hewlett Packard 19BII..

3 Using Financial and Business Calculators Most business and financial calculators offer a multitude of powerful functions. The purpose of this guide is to provide students with an easy and quick reference for some of the most commonly used financial functions. More detailed operational descriptions can be obtained from the owners manuals that accompany the calculators. This calculator guide discusses the basic functions of five business and financial calculators: the Texas Instruments (TI) BA-35 SOLAR, the Texas Instruments (TI) BA II PLUS, The Hewlett-Packard (HP) 12C, The Hewlett-Packard (HP) 17BII, and the Hewlett-Packard (HP) 19BII. The sections for each calculator present step-by-step instructions for using general and financial functions offered by each calculator. The calculations for each type of financial operation have been explained using sample problems. The display on the calculator s screen at the completion of each step has also been included to allow you to confirm your calculations as you proceed.

4 I. Texas Instruments (TI) BA-35 SOLAR The TI BA-35 SOLAR can operate in three different modes: statistical (STAT), financial (FIN), and profit margin. No indicator is displayed for the profit margin mode. To set the calculator to a particular mode, press MODE repeatedly until the appropriate indicator is displayed. Changing to a new mode clears the contents of the mode registers. Arithmetic, mathematical, and percentage operations can be executed in any of the three modes. The second function (2nd) invokes the second functions that are marked above some of the keys. To perform a second function, press 2nd and then the appropriate function key. If you accidentally press the 2nd key, simply press it again to cancel its affect. A. Clearing the calculator display and memory, and setting the decimal points: 1. AC/ON 0 Switch the calculator on. This will also clear the calculator completely, including the display, all pending operations, and the memory and mode operations. It also sets the calculator to floatingdecimal mode and financial mode. 2. CE/E 0 Clears incorrect entries, error conditions, the display, or pending operations. It does not affect the memory, the mode registers, or the display format. 3. 2nd CMR 0 Clears ay values that have been stored in the mode registers. Changing to a new mode also clears the contents of the mode registers. 4. 2nd Fix Sets the number of decimals to two. 5. 2nd Fix. 0 Sets decimals back to floating.

5 B. Calculating the present value of a lump sum amount: Example: Liz anticipates it will cost her \$65,000 to buy a house in eighteen months. How much should she invest today, at an annual interest rate of 15% (interest is compounded monthly), to be able to afford the house in one and a half years? Clear all memory. 1. AC/ON 0 Clears Time-Value-of-Money worksheet FV 65,000 Records the future cash flow of \$65, N 18 Calculates the number of time periods as = %i 1.25 Records the periodic interest rate of 1.25% per month for 18 months. 5. CPT PV 51, Calculates the present value of \$65000 in 1.5 years discounted at a monthly rate of 1.25%. C. Calculating the future value of a lump sum amount: Example: If John invests \$1,850 today in an asset earning a 10% rate of return (compounded annually), how much will he have after two years? Clear all memory. 1. AC/ON 0 Clears Time-Value-of-Money worksheet PV 1,850 Records the present cash outflow of \$1,850.

6 3. 10 %i 10 Stores annual rate of interest as 10% N 2 Records number of time periods as CPT FV 2, Calculates the future value of \$1,850 after 2 years at 10%. D. Calculating the present value of an annuity: Example: How much should you invest now so that, starting one year from today, your daughter can receive \$6,000 per year for the next five years? Assume the discount rate is 15%. Clear all memory. 1. AC/ON 0 Clears Time-Value-of-Money worksheet PMT 6,000 Records the amount of the periodic payments or annuity %i 15 Records annual rate of interest as 15% N 5 Records number of time periods as CPT PV PV = 20, Calculates the PV of the annuity. E. Calculating the present value of an annuity due: Example: In this case, instead of receiving payments at the end of each year, your daughter will receive the payments at the beginning of each year. Therefore, her first payment will be received immediately. Thereare two methods to calculate the present value of an annuity due:

7 1. You can calculate the present value of an annuity, as shown in section D, and multiply it by (1 + k). In that case the additional step would be: Follow steps 1-5 from section D. 6. x 1.15 = 23, Calculates the PV of the annuity due. 2. The TI BA-35 SOLAR allows you to set the timing of the payment. You have to set the payment mode at "BEGIN" and start from the first step. This method is shown below: Clear all memory. 1. AC/ON 0 Clears Time-Value-of-Money worksheet. 2. 2nd BGN Begin Sets the payment mode to beginning of the period PMT 6,000 Records the amount of the periodic payments %i 15 Records annual rate of interest as 15% N 5 Records number of time periods as CPT PV 23, Calculates the PV of the annuity due. 7. AC/ON 0 Clears Time-Value-of-Money worksheet and sets payments to the default end of the period position.

8 F. Calculating the future value of an annuity: Example: You have recently won a lottery for \$10,000. Your winnings will come in five annual payments of \$2,000 each, starting one year from now. If the annual compound rate is 11.4%, how much is the lottery worth at the end of five years? Clear all memory. 1. AC/ON 0 Clears Time-Value-of-Money worksheet PMT 2,000 Records the amount of periodic payments %i 11.4 Records the annual compound rate as 11.4% N 5 Records the number of time periods as CPT FV -12, Calculates FV of the annuity. G. Calculating the future value of an annuity due: Example: In this case, your winnings will be paid at the beginning, instead of at the end, of each year for five years. So, you are going to get the first payment of your \$10,000 lottery, i.e. \$2,000, immediately! Thereare two methods to calculate the future value of an annuity due: 1. You can calculate the future value of an annuity, as shown in section F, and multiply it by (1 + k). In that case the additional step would be: Follow steps 1-5 from section F. (i) 6. x = -13, Calculates the FV of the annuity due.

9 2. The TI BA-35 SOLAR allows you to set the timing of the payment. You have to set the payment mode at "BEGIN" and start from the first step. This method is shown below. Clear all memory. 1. AC/ON 0 Clears Time-Value-of-Money worksheet. 2. 2nd BGN Begin Sets the payment mode to beginning of the period PMT 2,000 Records the amount of the periodic payments %i 11.4 Records annual rate of interest as 11.4% N 5 Records number of time periods as CPT FV -13, Calculates the FV of the annuity due. 7. AC/ON 0 Clears Time-Value-of-Money worksheet and sets payments to the default end of the period position. H. Calculating the net present value of an annuity: Example: Jane thinks if she invests \$80,000 by buying property today, she can get \$15,000 in rent from it for each of the next twenty years (the rent will be paid quarterly). If she wants a rate of return of 12% (with quarterly discounting) on her investment, what is the net present value of this project? 1. The annual rate of return will be divided by four, i.e., the quarterly rate of return will be 3%. 2. The number of time periods will be multiplied by four, i.e., The amount of annual rent will be divided by four, i.e., \$3,750.

10 Clear all memory. 1. AC/ON 0 Clears Time-Value-of-Money worksheet = PMT 3,750 Records the amount of the quarterly periodic payments = %i 3 Records quarterly rate of interest as 3% x 4 = N 80 Records number of quarterly time periods as CPT PV 113, Calculates the PV of the annuity = 33, Computes the Net Present Value. I. Calculating the internal rate of return of an annuity: Example: ABC Inc. is planning to spend \$35,000 to buy a warehouse. Under the contract, they will receive an annual after-tax cash flow of \$6,000 (paid semiannually) from the property for the next eight years. What is the internal rate of return for the investment? Clear all memory. 1. AC/ON 0 Clears Time-Value-of-Money worksheet = PMT 3,000 Records the amount of the semiannual periodic payments PV 35,000 Records the cost of the warehouse x 2 = N 16 Records number of quarterly time periods as 80.

11 5. CPT %i 3.98 Calculates semiannual IRR. 6. x 2 = 7.97 Computes the IRR. J. Bond valuation with interest compounded annually: Example: How much would you be willing to pay for a bond today if it pays \$100 in interest annually for 20 years (starting next year), and has a principal payment of \$1,000? The yield to maturity is 15%. This question can be interpreted as that of finding the NPV of an uneven cash flow series, with the initial cash outflow equal to zero. Hence, we will follow the steps used for calculating NPV to compute the current price of the bond. Clear all memory. 1. AC/ON 0 Clears Time-Value-of-Money worksheet PMT 100 Records the amount of the periodic annual coupon payments %i 15 Records annual yield-tomaturity as15% N 20 Records number of time periods as FV 1000 Records the future face or par value of the bond. 6. CPT PV Calculates the bond s current market price.

12 K. Bond valuation with interest compounded semiannually: Since most bonds pay interest semiannually, we will show the conversion required to calculate the current value of such bonds. Example: If the bond described in section J pays interest semiannually, the calculations will be: I t =\$50, P n= \$1000, i=7.5%, n=40. Clear all memory. 1. AC/ON 0 Clears Time-Value-of-Money worksheet = PMT 50 Records the amount of the periodic semiannual coupon payments = %i 7.5 Records semiannual yield-tomaturity as7.5% x 2 = N 40 Records number of time periods as FV 1000 Records the future face or par value of the bond. 6. CPT PV Calculates the bond s current market price.

13 II. Texas Instruments (TI) BAII PLUS The TI BAII PLUS can perform two basic sets of financial functions. The first set of functions is invoked simply by pressing the relevant keys. The second set is invoked first by pressing the gray colored "2nd function key, which is located at the far left on the second row from the top, and then selecting the appropriate gray colored function written above the calculator keys. This 2nd key will be represented by 2nd" in this appendix. The BA II PLUS has a continuous memory. Turning off the calculator does not affect the contents stored in the memory, though the display is reset to zero. Therefore, it is extremely important to clear the calculator memory after each calculation. The BAII PLUS automatically turns itself off when not used for more than approximately ten minutes. A. Clearing the calculator display and memory, and setting the decimal points: 1. ON/OFF 0.00 Switch the calculator on. 2. 2nd QUIT 0.00 Resets the calculator to the standard mode, clears the screen. 3. 2nd MEM 2nd CLRWork MO=0.00 Clears all the memory locations simultaneously. 4. 2nd Format 9 ENTER DEC=9 Allows the number of decimal places on the calculator to float. 5. 2nd QUIT 0.00 Brings the calculator to the standard mode. To clear each memory location individually, use the following key sequence. 1. 2nd MEM MO=0 Clears the memory location ENTER M9=0 Clears the next memory location.

14 A worksheet for this calculator is a framework of formulae, such as the Time-Value-of-Money worksheet. The term "worksheet" has been used extensively in the owners manual and, hence, is being used in this appendix. Note: 1. We will be using two decimal places for all the calculations in this appendix. To reset the TI BA II PLUS to two decimal places, press <2nd><Format>><2><Enter> 2. Even though it displays two decimal digits, the TI BAII PLUS uses 13 digits in all calculations. 3. To erase a part of the entered display, use CE/C key. 4. The CE/C key can be used to clear any error displays. B. Using the memory capability: Example: Before leaving on a sales call one morning, Alfred stored the price of a fax machine (\$1,200) and a printer (\$1,000) in his calculator. Later that day, he sold three fax machines and four printers to a customer. He used his calculator to get the total amount due from this customer in the following way: Clear all memory STO 1 1, Stores the price of the fax machine in memory location STO 2 1, Stores the price of the printer in memory location ON/OFF Turns the calculator off. Later that day: 4. ON/OFF 0.00 After the sale, Alfred turns the calculator on. 5. RCL 1 1, Recalls the cost of the fax to the display. 6. x 3 = 3, Multiplies 1,200 by 3 to calculate the cost of the three fax machines. 7. STO 3 3, Stores the number in the memory location 3.

15 8. RCL 2 1, Recalls the cost of the printer. 9. x 4 = 4, Calculates cost of four printers RCL 3 = 7, Recalls the cost of fax machines to calculate the total amount for the sale. C. Calculating the present value of a lump sum amount: Example: Liz anticipates it will cost her \$65,000 to buy a house in eighteen months. How much should she invest today, at an annual interest rate of 15% (interest is compounded monthly), to be able to afford the house in one and a half years? Clear all memory. 1. 2nd CLRTVM 0.00 Clears Time-Value-of-Money worksheet. 2. 2nd P/Y 12 ENTER P/Y=12.00 Sets number of payments per year to nd QUIT 0.00 Brings the calculator to the standard mode FV FV=65, Records the future cash flow of \$65, I/Y I/Y=15.00 Records the periodic rate of interest as 15% nd xp/y Calculates the number of time periods as N N=18.00 Stores the number of time periods. 8. CPT PV PV=-51, Calculates the present value of \$65000 in 1.5 years discounted at a monthly rate of 1.25%. Note: The display in step 8 has a negative sign because it represents a cash outflow (investment) today.

16 D. Calculating the future value of a lump sum amount: Example: If John invests \$1,850 today in an asset earning a 10% rate of return (compounded annually), how much will he have after two years? Clear all memory. 1. 2nd CLRTVM 0.00 Clears Time-Value-of-Money worksheet. 2. 2nd P/Y 1 ENTER P/Y=1.00 Sets number of payments per year to nd QUIT 0.00 Brings the calculator to the standard mode / PV PV= 1, Records the present cash outflow of \$1, I/Y I/Y=10.00 Stores annual rate of interest as 10% N N=2.00 Records number of time periods as CPT FV FV=2, Calculates the future value of \$1,850 after 2 years at 10%. E. Calculating the present value of an annuity: Example: How much should you invest now so that, starting one year from today, your daughter can receive \$6,000 per year for the next five years? Assume the discount rate is 15%.

17 Clear all memory. 1. 2nd CLRTVM 0.00 Clears Time-Value-of-Money worksheet. 2. 2nd P/Y 1 ENTER P/Y=1.00 Sets number of payments per year to nd QUIT 0.00 Brings the calculator to the standard mode PMT PMT=6, Records the amount of the periodic payments I/Y I/Y=15.00 Records annual rate of interest as 15% N N=5.00 Records number of time periods as CPT PV PV= 20, Calculates the PV of the annuity. F. Calculating the present value of an annuity due: Example: In this case, instead of receiving payments at the end of each year, your daughter will receive the payments at the beginning of each year. Therefore, her first payment will be received immediately. Thereare two methods to calculate the present value of an annuity due: 1. You can calculate the present value of an annuity, as shown in section E, and multiply it by (1 + k). In that case the additional step would be: Follow steps 1-7 from section E. 8. x 1.15 = -23, Calculates the PV of the annuity due.

18 2. The TI BAII PLUS allows you to set the timing of the payment. You have to set the payment mode at "BEGIN" and start from the first step. This method is shown below: Clear all memory. 1. 2nd CLRTVM 0.00 Clears Time-Value-of-Money worksheet. 2. 2nd P/Y 1 ENTER P/Y=1.00 Sets number of payments per year to nd BGN END Shows the default setting for the payment mode. 4. 2nd SET BGN Sets the payment mode to beginning of the period. 5. 2nd QUIT 0.00 Brings the calculator to the standard mode PMT PMT=6, Records the amount of the periodic payments I/Y I/Y=15.00 Records annual rate of interest as 15% N N=5.00 Records number of time periods as CPT PV PV= 23, Calculates the PV of the annuity due nd BGN BGN Invokes the payment mode nd SET END Sets the payment mode to the end of the period nd QUIT 0.00 Brings the calculator to the standard mode.

19 G. Calculating the future value of an annuity: Example: You have recently won a lottery for \$10,000. Your winnings will come in five annual payments of \$2,000 each, starting one year from now. If the annual compound rate is 11.4%, how much is the lottery worth at the end of five years? Clear all memory. 1. 2nd CLRTVM 0.00 Clears Time-Value-of-Money worksheet. 2. 2nd P/Y 1 ENTER P/Y=1.00 Sets number of payments per year to nd QUIT 0.00 Brings the calculator to the standard mode PMT PMT=2, Records the amount of periodic payments I/Y I/Y=11.40 Records the annual compound rate as 11.4% N N=5.00 Records the number of time periods as CPT FV +/- 12, Calculates FV of the annuity. H. Calculating the future value of an annuity due: Example: In this case, your winnings will be paid at the beginning, instead of at the end, of each year for five years. So, you are going to get the first payment of your \$10,000 lottery, i.e. \$2,000, immediately! Thereare two methods to calculate the future value of an annuity due: 1. You can calculate the future value of an annuity, as shown in section G, and multiply it by (1 + k). In that case the additional step would be: Follow steps 1-7 from section G. 8. x = 13, Calculates the FV of the annuity due.

20 2. The TI BAII PLUS allows you to set the timing of the payment. You have to set the payment mode at "BEGIN" and start from the first step. This method is shown below. Clear all memory. 1. 2nd CLRTVM 0.00 Clears Time-Value-of-Money worksheet. 2. 2nd P/Y 1 ENTER P/Y=1.00 Sets number of payments per year to nd BGN END Shows the default setting for the payment mode. 4. 2nd SET BGN Sets the payment mode to beginning of the period. 5. 2nd QUIT 0.00 Brings the calculator to the standard mode PMT PMT=2, Records the amount of the periodic payment I/Y I/Y=11.40 Records annual rate of interest as 11.4% N N=5.00 Records number of time periods as CPT FV +/- 13, Calculates the FV of an annuity due nd BGN BGN Invokes the payment mode nd SET END Sets the payment mode to the end of the period nd QUIT 0.00 Brings the calculator to the standard mode.

21 I. Calculating the net present value of an annuity: Example: Jane thinks if she invests \$80,000 by buying property today, she can get \$15,000 in rent from it for each of the next twenty years (the rent will be paid quarterly). If she wants a rate of return of 12% (with quarterly discounting) on her investment, what is the net present value of this project? 1. The annual rate of return will be divided by four, i.e., the quarterly rate of return will be 3%. 2. The number of time periods will be multiplied by four, i.e., The amount of annual rent will be divided by four, i.e., \$3,750. Clear all memory. 1. 2nd CLRWork 0.00 Clears the Cash Flow worksheet. 2. 2nd Reset ENTER RST 0.00 Resets all variables to zero. 3. CF / CF 0-80,000 Inputs initial cash outflow. 4. ENTER CF 0 =-80, Stores initial cash outflow C01 15, Calculates periodic cash inflows ENTER C01=3, Stores quarterly cash inflow amount x 4 ENTER F01=80.00 Stores the number of times the quarterly cash inflow occurs. 8. NPV 12 4 ENTER I=3.00 Stores the quarterly interest rate as 3%. 9. CPT NPV=33, Calculates the net present value of the investment.

22 J. Calculating the net present value of a series of uneven cash flows: The TI BAII PLUS can store 24 cash flow groups, besides the initial cash investment. A cash flow group comprises the cash flow amount and the number of times it repeats consecutively in the cash flow series. Each cash flow group can have up to 9,999 cash flows i.e., the maximum value of Fnn (the frequency of consecutive cash flows in one group) can be 9,999. Example: Beth is planning to buy a Pentium based PC for rental purposes. She has calculated that her expected cash flows from the investment for the next five years would be as shown below. \$2,500 \$1,500 \$1,000 \$1,000 \$800 CF 0 = -\$4,000 If she has to pay an annual interest rate of 9.75%, should she buy the computer? Clear all memory. 1. 2nd CLRWork 0.00 Clears the Cash Flow worksheet. 2. 2nd Reset ENTER RST 0.00 Resets all variables to zero. 3. CF / CF 0-4,000 Inputs initial cash outflow. 4. ENTER CF 0 = 4, Stores initial cash outflow ENTER C01=2, Stores the first cash inflow. 6. F01=1.00 Records that cash inflow of \$2,500 occurs once ENTER C02=1, Stores the second cash inflow. 8. F02=1.00 Records that cash inflow of \$1,500 occurs once ENTER C03=1, Stores the third cash inflow.

23 10. 2 ENTER F03=2.00 Stores the number of times that cash inflow of \$1,000 repeats ENTER C04= Stores the fifth cash inflow. 12. NPV 9.75 ENTER I=9.75 Stores the annual interest rate as 9.75%. 13. CPT NPV=1, Calculates the net present value of the investment. K. Calculating the internal rate of return of an annuity: Example: ABC Inc. is planning to spend \$35,000 to buy a warehouse. Under the contract, they will receive an after-tax cash flow of \$6,000 (paid semiannually) from the property for the next eight years. What is the internal rate of return for the investment? Clear all memory. 1. 2nd CLRWork 0.00 Clears the Cash Flow worksheet. 2. 2nd Reset ENTER RST 0.00 Resets all variables to zero. 3. CF / C 0-35, Change sign to show cash outflow. 4. ENTER CF 0 =-35, Stores initial cash investment C01 6, Computes semi-annual cash inflow ENTER C01=3, Stores semi-annual cash inflow x F Calculate the total number of time periods ENTER F01=16.00 Store total number of time periods.

24 9. IRR CPT IRR=3.98 Calculates semi-annual IRR of this investment. 10. x 2 = IRR 7.97 Calculates annual IRR of this investment. L. Calculating the internal rate of return of a series of uneven cash flows: Example: Healthtime has the opportunity to make an investment that requires an initial cash outflow of \$6,500.. The estimated cash inflows from the project for the next 6 years are shown below. What is the IRR on this investment? \$1,000 \$1,000 \$900 \$900 \$750 \$60,000 CF 0 = -\$6,500 Clear all memory. 1. 2nd CLRWork 0.00 Clears the Cash Flow worksheet. 2. 2nd Reset ENTER RST 0.00 Resets all variables to zero. 3. CF / CF 0-6, Change sign to show cash outflow. 4. ENTER CF 0 =-6, Stores initial cash investment ENTER C01=1, Stores first cash inflow ENTER F01=2.00 Records that cash inflow of \$1,000 occurs twice ENTER C02= Stores second cash flow amount ENTER F02=2.00 Records that cash inflow of \$900 occurs twice ENTER C03= Stores third cash flow amount.

25 10. F03=1.00 Shows that cash flow of \$750,000 occurs once ENTER C04=60, Stores final cash inflow of \$60, IRR CPT IRR=51.88 Calculates IRR of this investment. M. Bond valuation with interest compounded annually: Example: How much would you be willing to pay for a bond today if it pays \$100 in interest annually for 20 years (starting next year), and has a principal payment of \$1,000? The yield to maturity is 15%. This question can be interpreted as that of finding the NPV of an uneven cash flow series, with the initial cash outflow equal to zero. Hence, we will follow the steps used for calculating NPV to compute the current price of the bond. Clear all memory. 1. 2nd CLRWork 0.00 Clears the Cash Flow worksheet. 2. 2nd Reset ENTER RST 0.00 Resets all variables to zero. 3. CF 0 ENTER CF 0= 0.00 Inputs initial cash outflow as zero ENTER C01= Stores the first cash inflow ENTER F01=19.00 Records that cash inflow of \$100 occurs 19 times ENTER C02=1, Stores the final cash inflow. 7. NPV 15 ENTER I=15.00 Stores the annual discount rate as 15%. 8. CPT NPV= Calculates the initial price of the bond.

26 N. Bond valuation with interest compounded semiannually: Since most bonds pay interest semiannually, we will show the conversion required to calculate the current value of such bonds. Example: If the bond described in section K pays interest semiannually, the calculations will be: I t =\$50, P n= \$1000, i=7.5%, n=40. Clear all memory. 1. 2nd CLRWork 0.00 Clears the Cash Flow worksheet. 2. 2nd Reset ENTER RST 0.00 Resets all variables to zero. 3. CF 0 ENTER CF o =0.00 Inputs initial cash outflow as zero C Calculates the semiannual interest payment ENTER C01=50.00 Stores the semiannual interest payment as \$ x F Calculates the number of periods when cash inflow of \$50 will occur ENTER F01=39.00 Stores the number of interest periods ENTER C02=1, Stores the final cash inflow. 9. NPV 15 I Calculates semiannual discount rate ENTER I=7.50 Stores semiannual discount rate as 7.5%. 11. CPT NPV= Calculates the initial price of the bond.

27 III. Hewlett Packard (HP) 12C The HP 12C is color-coded. The gold f key refers to the function coded in gold above the keys on the calculator. Similarly, the blue g key refers to the functions coded in blue on the lower portion of the keys themselves. The HP 12C has continuous memory. Therefore, turning of the calculator does not affect the information you have previously stored in the calculator. If not turned off manually, the calculator will turn off automatically approximately 8 to 17 minutes after last use. A. Clearing the calculator display and memory, and setting the decimal points: 1. ON CLX f REG Clears screen and storage registers. 2. f FIN Clears the financial registers. 3. f Sets the number of decimal places equal to 2. Note: the HP12C will perform calculations to 10 decimals even though only two decimals are displayed. B. Using the memory capability: Example: Before leaving on a sales call one morning, Alfred stored the price of a fax machine (\$1,200) and a printer (\$1,000) in his calculator. Later that day, he sold three fax machines and four printers to a customer. He used his calculator to get the total amount due from this customer in the following way: Clear all memory and financial registers STO 1 1, Stores the price of the fax machine in memory location STO 2 1, Stores the price of the printer in memory location 2.

28 3. ON Turns the calculator off. Later that day: 4. ON 1, After the sale, Alfred turns the calculator on. 5. RCL 1 1, Recalls the cost of the fax to the display x 3, Multiplies 1,200 by 3 to calculate the cost of the three fax machines. 7. RCL 2 1, Recalls the cost of the printer x 4, Calculates cost of four printers , Totals the amount for this sale. C. Calculating the present value of a lump sum amount: Example: Liz anticipates it will cost her \$65,000 to buy a house in eighteen months. How much should she invest today, at an annual interest rate of 15% (interest is compounded monthly), to be able to afford the house in one and a half years? Clear the memory and financial registers FV 65, Record s the future cash flow of \$65, g Records the monthly interest rate of 1.25% g 12 x Records the number of time periods as 18.

29 4. PV -51, Calculates the present value of \$65000 in 1.5 years discounted at a monthly rate of 1.25%. Note: The display in step 8 has a negative sign because it represents a cash outflow (investment) today. D. Calculating the future value of a lump sum amount: Example: If John invests \$1,850 today in an asset earning a 10% rate of return (compounded annually), how much will he have after two years? Clear the memory and financial registers CHS PV -1, Records the present cash outflow of \$1, i Records the annual interest rate of 10% n 2.00 Records the number of time periods as FV 2, Calculates the future value of \$1,850 after 2 years at 10%. E. Calculating the present value of an annuity: Example: How much should you invest now so that, starting one year from today, your daughter can receive \$6,000 per year for the next five years? Assume the discount rate is 15%. Clear the memory and financial registers PMT 6, Records the amount of the periodic payments.

30 2. 15 i Records the annual interest rate of 15% n 5.00 Records the number of time periods as PV -20, Calculates the present value of the annuity. F. Calculating the present value of an annuity due: Example: In this case, instead of receiving payments at the end of each year, your daughter will receive the payments at the beginning of each year. Therefore, her first payment will be received immediately. Thereare two methods to calculate the present value of an annuity due: 1. You can calculate the present value of an annuity, as shown in section E, and multiply it by (1 + k). In that case the additional step would be: Follow steps 1-4 from section E Records the second term (1+k) in the formula for an annuity due. 6. x -23, Calculates the PV of the annuity due. 2. The HP 12C allows you to set the timing of the payment. You have to set the payment mode at "BEGIN" and start from the first step. This method is shown below: Clear the memory and financial registers. 1. g BEG BEGIN Displays BEGIN at the bottom of the screen to indicate that payment is made at the beginning of the period.

31 PMT 6, Records the amount of the periodic payments i Records the annual interest rate of 15% n 5.00 Records the number of time periods as g END Toggles to the default setting of end-of-the-period payments. G. Calculating the future value of an annuity: Example: You have recently won a lottery for \$10,000. Your winnings will come in five annual payments of \$2,000 each, starting one year from now. If the annual compound rate is 11.4%, how much is the lottery worth at the end of five years? Clear the memory and financial registers PMT 2, Records the amount of periodic payments i 11.4 Records the annual rate of interest of 11.4% n 5.00 Records the number of time periods as FV CHS 12, Calculates the FV of an annuity. H. Calculating the future value of an annuity due: Example: In this case, your winnings will be paid at the beginning, instead of at the end, of each year for five years. So, you are going to get the first payment of your \$10,000 lottery, i.e. \$2,000, immediately! Thereare two methods to calculate the future value of an annuity due: 1. You can calculate the future value of an annuity, as shown in section G, and multiply it by (1 + k). In that case the additional step would be:

32 Follow steps 1-4 from section G Records the second (1+k) term in the formula for an annuity due. 6. x 13, Calculates the FV of the annuity due. 2. The HP 12C allows you to set the timing of the payment. You have to set the payment mode at "BEGIN" and start from the first step. This method is shown below. Clear the memory and financial registers. 1. g BEG BEGIN Displays the BEGIN at the bottom of the screen to indicate that payment is made at the beginning of the period PMT 2, Records the amount of periodic payments i Records the annual rate of interest of 11.4% n 5.00 Records the number of time periods as FV CHS 13, Calculates the FV of an annuity due. 6. g END Toggles to the default setting of end-of-the-period payments.

33 I. Calculating the net present value of an annuity: Example: Jane thinks if she invests \$80,000 by buying property today, she can get \$15,000 in rent from it for each of the next twenty years (the rent will be paid quarterly). If she wants a rate of return of 12% (with quarterly discounting) on her investment, what is the net present value of this project? 1. The annual rate of return will be divided by four, i.e., the quarterly rate of return will be 3%. 2. The number of time periods will be multiplied by four, i.e., The amount of annual rent will be divided by four, i.e., \$3,750. Clear the memory and financial registers CHS -80,000 Record the initial cash outflow of \$80, g CF0-80, Stores the initial investment in the financial register g CFj 3, Stores cash inflow amount g Nj Records the number of time periods as i 3.00 Records the quarterly interest rate of 3%. 6. f NPV 33, Calculates the net present value of the investment. J. Calculating the net present value of a series of uneven cash flows: The HP 12C can store 24 cash flow groups, besides the initial cash investment. A cash flow group comprises the cash flow amount and the number of times it repeats consecutively in the cash flow series. Each cash flow group can have up to 9,999 cash flows i.e., the maximum value of Fnn (the frequency of consecutive cash flows in one group) can be 9,999. Example: Beth is planning to buy a Pentium based PC for rental purposes. She has calculated that her expected cash flows from the investment for the next five years would be as shown below.

34 \$2,500 \$1,500 \$1,000 \$1,000 \$800 CF 0 = -\$4,000 If she has to pay an annual interest rate of 9.75%, should she buy the computer? Clear the memory and financial registers CHS -4, Enter the initial investment of \$4, g CF0-4, Stores the initial investment in the financial register g CFj 2, Stores the first cash inflow amount g CFj 1, Stores the second cash inflow amount g CFj 1, Stores the third cash inflow amount g Nj 2.00 Records that \$1,000 occurs twice for both the third and fourth time periods g CFj Stores the fifth cash inflow amount I 9.75 Records the annual interest rate of 9.75%. 9. f NPV 1, Calculates the net present value of the investment. K. Calculating the internal rate of return of an annuity: Example: ABC Inc. is planning to spend \$35,000 to buy a warehouse. Under the contract, they will receive an after-tax cash flow of \$6,000 (paid semiannually) from the property for the next eight years. What is the internal rate of return for the investment?

35 Clear the memory and financial registers CHS -35,000 Enter the initial investment of \$35, g CF0-35, Stores the initial investment in the financial register g CFj 3, Stores the semi-annual cash inflow amount g Nj Stores the total number of time periods as f IRR 3.98 Calculates the semi-annual IRR x 7.97 Calculates the IRR of the investment. L. Calculating the internal rate of return of a series of uneven cash flows: Example: Healthtime has the opportunity to make an investment that requires an initial cash outflow of \$6,500.. The estimated cash inflows from the project for the next 6 years are shown below. What is the IRR on this investment? \$1,000 \$1,000 \$900 \$900 \$750 \$60,000 CF 0 = -\$6,500 Clear the memory and financial registers CHS -6,500 Enter the initial investment of \$6, g CF0-6, Stores the initial investment in the financial register.

36 3. 1,000 g CFj 1, Stores the first cash inflow amount 4. 2 g Nj 2.00 Stores \$1,000 as the cash inflow amount for both the first and second periods g CFj Stores the amount of the third cash inflow g Nj 2.00 Records that \$900 occurs twice for the third an fourth periods g CFj Stores the fifth cash inflow amount ,000 g CFj 60, Stores the sixth cash inflow amount. 9. f IRR Calculates the internal rate of return for the cash flow series. M. Bond valuation with interest compounded annually: Example: How much would you be willing to pay for a bond today if it pays \$100 in interest annually for 20 years (starting next year), and has a principal payment of \$1,000? The yield to maturity is 15%. This question can be interpreted as that of finding the NPV of an uneven cash flow series, with the initial cash outflow equal to zero. Hence, we will follow the steps used for calculating NPV to compute the current price of the bond. Clear the memory and financial registers g CF Stores the initial investment as zero in the financial register g CFj Stores the first cash inflow amount.

37 3. 19 g Nj Records that interest payments of \$100 occur 19 times g CFj Stores the amount of the last cash inflow (interest + principal) i Records the yield-to-maturity as 15%. 6. f NPV Computes the current bond price. N. Bond valuation with interest compounded semiannually: Since most bonds pay interest semiannually, we will show the conversion required to calculate the current value of such bonds. Example: If the bond described in section K pays interest semiannually, the calculations will be: I t =\$50, P n= \$1000, i=7.5%, n=40. Clear the memory and financial registers g CF Stores the initial investment as zero in the financial register g CFj Stores the first cash inflow amount g Nj Records that interest payments of \$50 occur 39 times g CFj Stores the amount of the last cash inflow (interest + principal payment) i 7.50 Records the semi-annual YTM as 7.5%. 6. f NPV Calculates the current bond value.

38 III. Hewlett Packard (HP) 17BII The HP 17BII contains a two-line display space for messages, prompts, and labels. Menus and messages show you options and guide you through problems. Some keys and functions are activated by pressing the SHIFT key, which is the amber colored key located at the far left on the second line of keys from the bottom. The CLR (clear key) clears the calculator display line. Pressing SHIFT CLEAR DATA will clear all information in the current work area such as a time value of money worksheet. It is also important to note that most financial calculations are accomplished by accessing the appropriate variable as displayed on the display panel. In order to select a particular variable, it is necessary to depress the up arrow symbol ^ located directly beneath the variable along the row of keys just beneath the display panel. For the sake of brevity in this guide, only the actual variable name will be indicated even though the up arrow symbol beneath the variable is actually depressed. To return to the main display line menu, simply press SHIFT MAIN. To back out of a particular menu without going all the way back to the main menu, simply press EXIT. The HP 17BII has continuous memory. Therefore, turning of the calculator does not affect the information you have previously stored in the calculator. If not turned off manually, the calculator will turn off automatically approximately 10 minutes after last use. A. Clearing the calculator display and memory, and setting the decimal points: 1. SHIFT CLEAR DATA 0.00 Clears screen and storage registers. 2. DSP FIX ^ Sets the number of decimal places equal to 2. B. Using the memory capability: Example: Before leaving on a sales call one morning, Alfred stored the price of a fax machine (\$1,200) and a printer (\$1,000) in his calculator. Later that day, he sold three fax machines and four printers to a customer. He used his calculator to get the total amount due from this customer in the following way:

39 Clear all memory and financial registers STO 1 1, Stores the price of the fax machine in memory location STO 2 1, Stores the price of the printer in memory location SHIFT OFF Turns the calculator off. Later that day: 4. ON 1, After the sale, Alfred turns the calculator on. 5. RCL 1 1, Recalls the cost of the fax to the display. 6. x 3 = 3, Multiplies 1,200 by 3 to calculate the cost of the three fax machines. 7. STO 3 3, Stores the cost of the three fax machine. 7. RCL 2 1, Recalls the cost of the printer. 8. x 4 = 4, Calculates cost of four printers RCL 3 = 7, Totals the amount for this sale. C. Navigating Menus The main menu is obtained by turning the calculator ON. The main Menu appears as follows: 0.00 FIN BUS SUM TIME SOLVE

40 For most calculations finance students will undertake, it will be necessary to next select the finance menu by selecting FIN, and then TVM for time value of money. The TVM menu appears as follows: 12 P/YR END MODE N I%Y PV PMT FV OTHER The HP 17BII is programmed with the assumption that interest is compounded 12 times each year (monthly compounding). This manual will reset the number of compounding periods to once per year and adjust the interest rate as needed in the calculations. The number of compounding periods and interest can be set to annual compounding as follows: 1. Select the TVM Menu 2. OTHER 1 P/YR 1 P/YR END MODE Sets the calculator for annual compounding (one compounding period per year). Note: To back out of menus, simply depress the EXIT key. D. Calculating the present value of a lump sum amount: Example: Liz anticipates it will cost her \$65,000 to buy a house in eighteen months. How much should she invest today, at an annual interest rate of 15% (interest is compounded monthly), to be able to afford the house in one and a half years? 1. SHIFTCLEAR DATA 0.00 Clears previously stored data. 2. FIN TVM 1 P/YR END MODE Accesses the TVM Menu FV FV=65, Records the FV amount of \$65, = I%YR I%YR=1.25 records the monthly interest rate of 1.25% N N=18 records the number of monthly periods as 18.

41 6. PV PV = -51, Calculates the present value. Note: The display in step 8 has a negative sign because it represents a cash outflow (investment) today. E. Calculating the future value of a lump sum amount: Example: If John invests \$1,850 today in an asset earning a 10% rate of return (compounded annually), how much will he have after two years? Clear the data and select the TVM Menu /- PV PV = -1, Records the present cash outflow of \$1, I%YR I%YR = Records the annual interest rate of 10% N N = 2.00 Records the number of time periods as FV FV = 2, Calculates the future value of \$1,850 after 2 years at 10%. F. Calculating the present value of an annuity: Example: How much should you invest now so that, starting one year from today, your daughter can receive \$6,000 per year for the next five years? Assume the discount rate is 15%. Clear the data and select the TVM Menu PMT PMT = 6, Records the amount of the periodic payments I%YR I%YR = Records the annual interest rate of 15%.

42 3. 5 N N = 5.00 Records the number of time periods as PV PV = -20, Calculates the present value of the annuity. G. Calculating the present value of an annuity due: Example: In this case, instead of receiving payments at the end of each year, your daughter will receive the payments at the beginning of each year. Therefore, her first payment will be received immediately. Thereare two methods to calculate the present value of an annuity due: 1. You can calculate the present value of an annuity, as shown in section F, and multiply it by (1 + k). In that case the additional step would be: Follow steps 1-4 from section F. 5. x 1.15 = -23, Records the second term (1+k) in the formula for an annuity due. 2. The HP 17BII allows you to set the timing of the payment. You have to set the payment mode at "BEGIN" and start from the first step. This method is shown below: Clear the data and select the TVM Menu 1. OTHER BEG 1 P/YR BEGIN MODE Sets the calculator to beginning of the period payments. 2. EXIT 6000 PMT PMT = 6, Records the amount of the periodic payments I%YR I%YR = Records the annual interest rate of 15%.

43 4. 5 N N = 5.00 Records the number of time periods as PV PV = - 23, Calculates the PV of the annuity due. H. Calculating the future value of an annuity: Example: You have recently won a lottery for \$10,000. Your winnings will come in five annual payments of \$2,000 each, starting one year from now. If the annual compound rate is 11.4%, how much is the lottery worth at the end of five years? Clear the data and select the TVM Menu PMT PMT = 2, Records the amount of periodic payments I%Y I%YR = 11.4 Records the annual rate of interest of 11.4% N N = 5.00 Records the number of time periods as FV +/- FV = 12, Calculates the FV of an annuity. I. Calculating the future value of an annuity due: Example: In this case, your winnings will be paid at the beginning, instead of at the end, of each year for five years. So, you are going to get the first payment of your \$10,000 lottery, i.e. \$2,000, immediately! Thereare two methods to calculate the future value of an annuity due: 1. You can calculate the future value of an annuity, as shown in section H, and multiply it by (1 + k). In that case the additional step would be: Follow steps 1-4 from section H. 5. x = 13, Calculates the FV of the annuity due.

44 2. The HP 17BII allows you to set the timing of the payment. You have to set the payment mode at "BEGIN" and start from the first step. This method is shown below. Clear the data and select the TVM Menu 1. OTHER BEG 1 P/YR BEGIN MODE Sets the calculator to beginning of the period payments. 2. EXIT 2000 PMT PMT = 2, Records the amount of the periodic payments I%YR I%YR = Records the annual interest rate of 11.4% N N = 5.00 Records the number of time periods as FV FV = -13, Calculates the FV of the annuity due. J. Calculating the net present value of an annuity: Example: Jane thinks if she invests \$80,000 by buying property today, she can get \$15,000 in rent from it for each of the next twenty years (the rent will be paid quarterly). If she wants a rate of return of 12% (with quarterly discounting) on her investment, what is the net present value of this project? 3. The annual rate of return will be divided by four, i.e., the quarterly rate of return will be 3%. 4. The number of time periods will be multiplied by four, i.e., The amount of annual rent will be divided by four, i.e., \$3, On SHIFT CLEAR DATA 0.00 Turn on and clear the calculator

45 2. FIN CFLO FLOW (0) =? Select the cash flow data input register /- INPUT FLOW (1) =? -80, Stores the initial investment in the financial register INPUT TIMES (1) = 1 Enters the quarterly annuity cash inflow and prompts the user to enter the number of periods INPUT EXIT CALC NPV, NUS, NFV = I% Enters the number of periods and prompts the user for the interest rate I% NPV NPV = 33, Enters the quarterly interest rate and calculates the net present value of the investment. K. Calculating the net present value of a series of uneven cash flows: Example: Beth is planning to buy a Pentium based PC for rental purposes. She has calculated that her expected cash flows from the investment for the next five years would be as shown below. \$2,500 \$1,500 \$1,000 \$1,000 \$800 CF 0 = -\$4,000 If she has to pay an annual interest rate of 9.75%, should she buy the computer? 1. On SHIFT CLEAR DATA 0.00 Turn on and clear the calculator 2. FIN CFLO FLOW (0) =? Select the cash flow data input register /- INPUT FLOW (1) =? -4, Stores the initial investment in the financial register.

46 INPUT INPUT FLOW (2) =? 1.00 Stores the second cash inflow amount INPUT INPUT FLOW (3) =? 1.00 Stores the third cash inflow amount INPUT 2 INPUT FLOW (4) =? 2.00 Stores the third and fourth cash inflow INPUT INPUT 2.00 Stores the fifth cash inflow amount. 7. EXIT CALC 9.75 I% I% = 9.75 Enters the discount rate. 8. NPV 1, Calculates the net present value of the investment. L. Calculating the internal rate of return of an annuity: Example: ABC Inc. is planning to spend \$35,000 to buy a warehouse. Under the contract, they will receive an after-tax cash flow of \$6,000 (paid semiannually) from the property for the next eight years. What is the internal rate of return for the investment? 1. On SHIFT CLEAR DATA 0.00 Turn on and clear the calculator 2. FIN CFLO FLOW (0) =? Select the cash flow data input register /- INPUT FLOW (1) =? -35, Stores the initial investment in the financial register INPUT TIMES (1) = 1 Enters the semiannual annuity cash inflow and prompts the user to enter the number of periods INPUT EXIT CALC NPV, NUS, NFV = I% Enter the number of semiannual time periods.

### Continue this process until you have cleared the stored memory positions that you wish to clear individually and keep those that you do not.

Texas Instruments (TI) BA II PLUS Professional The TI BA II PLUS Professional functions similarly to the TI BA II PLUS model. Any exceptions are noted here. The TI BA II PLUS Professional can perform two

### Hewlett Packard (HP) 10BII

Hewlett Packard (HP) 10BII The HP10BII is programmed to perform two basic types of operations: statistical operations and financial operations. Various types of computations are activated by depressing

### Using Financial Calculators

Chapter 4 Discounted Cash Flow Valuation 4B-1 Appendix 4B Using Financial Calculators This appendix is intended to help you use your Hewlett-Packard or Texas Instruments BA II Plus financial calculator

### HANDBOOK: HOW TO USE YOUR TI BA II PLUS CALCULATOR

HANDBOOK: HOW TO USE YOUR TI BA II PLUS CALCULATOR This document is designed to provide you with (1) the basics of how your TI BA II Plus financial calculator operates, and (2) the typical keystrokes that

### Note: In the authors opinion the Ativa AT 10 is not recommended as a college financial calculator at any level of study

Appendix 1: Ativa AT 10 Instructions Note: DNS = Does Not Calculate Note: Loan and Savings Calculations Automatically round to two decimals. -Clear -Store Data in Memory -Recall Stored Data in Memory [CE]

### Texas Instruments BAII PLUS Tutorial

To begin, look at the face of the calculator. Almost every key on the BAII PLUS has two functions: each key's primary function is noted on the key itself, while each key's secondary function is noted in

### Introduction. Turning the Calculator On and Off

Texas Instruments BAII PLUS Calculator Tutorial to accompany Cyr, et. al. Contemporary Financial Management, 1 st Canadian Edition, 2004 Version #6, May 5, 2004 By William F. Rentz and Alfred L. Kahl Introduction

BA II Plus Advanced Business Analyst Calculator Quick Guide to Settings and Concepts Purpose of Guide This Quick Guide is a supplement to the BA II Plus Guidebook. It includes brief examples of commonly

### Course FM / Exam 2. Calculator advice

Course FM / Exam 2 Introduction It wasn t very long ago that the square root key was the most advanced function of the only calculator approved by the SOA/CAS for use during an actuarial exam. Now students

### appendix B COMPOUND SUM OF AN ANNUITY OF \$1 appendix C PRESENT VALUE OF \$1 appendix D PRESENT VALUE OF AN ANNUITY OF \$1

appendices appendix A COMPOUND SUM OF \$1 appendix B COMPOUND SUM OF AN ANNUITY OF \$1 appendix C PRESENT VALUE OF \$1 appendix D PRESENT VALUE OF AN ANNUITY OF \$1 appendix E TIME VALUE OF MONEY AND INVESTMENT

### Texas Instruments BAII Plus Tutorial for Use with Fundamentals 11/e and Concise 5/e

Texas Instruments BAII Plus Tutorial for Use with Fundamentals 11/e and Concise 5/e This tutorial was developed for use with Brigham and Houston s Fundamentals of Financial Management, 11/e and Concise,

### Main TVM functions of a BAII Plus Financial Calculator

Main TVM functions of a BAII Plus Financial Calculator The BAII Plus calculator can be used to perform calculations for problems involving compound interest and different types of annuities. (Note: there

### TIME VALUE OF MONEY. Hewlett-Packard HP-12C Calculator

SECTION 1, CHAPTER 6 TIME VALUE OF MONEY CHAPTER OUTLINE Clues, Hints, and Tips Present Value Future Value Texas Instruments BA II+ Calculator Hewlett-Packard HP-12C Calculator CLUES, HINTS, AND TIPS Present

### In this section, the functions of a financial calculator will be reviewed and some sample problems will be demonstrated.

Section 4: Using a Financial Calculator Tab 1: Introduction and Objectives Introduction In this section, the functions of a financial calculator will be reviewed and some sample problems will be demonstrated.

### BASICS. Access blue functions with [Shift up] Access orange functions with [Shift down]

CALCULATOR COURSE BASICS Most keys have three functions: Primary function printed in white Secondary function printed in orange Tertiary function printed in blue Access blue functions with [Shift up] Access

### HP 12C Calculations. 2. If you are given the following set of cash flows and discount rates, can you calculate the PV? (pg.

HP 12C Calculations This handout has examples for calculations on the HP12C: 1. Present Value (PV) 2. Present Value with cash flows and discount rate constant over time 3. Present Value with uneven cash

### Key Concepts and Skills

McGraw-Hill/Irwin Copyright 2014 by the McGraw-Hill Companies, Inc. All rights reserved. Key Concepts and Skills Be able to compute: The future value of an investment made today The present value of cash

### Texas Instruments BAII PLUS Tutorial

Omar M. Al Nasser, Ph.D., MBA. Visiting Assistant Professor of Finance School of Business Administration University of Houston-Victoria Email: alnassero@uhv.edu Texas Instruments BAII PLUS Tutorial To

### Time Value of Money. If you deposit \$100 in an account that pays 6% annual interest, what amount will you expect to have in

Time Value of Money Future value Present value Rates of return 1 If you deposit \$100 in an account that pays 6% annual interest, what amount will you expect to have in the account at the end of the year.

### The explanations below will make it easier for you to use the calculator. The ON/OFF key is used to turn the calculator on and off.

USER GUIDE Texas Instrument BA II Plus Calculator April 2007 GENERAL INFORMATION The Texas Instrument BA II Plus financial calculator was designed to support the many possible applications in the areas

### Calculator (Hewlett-Packard 10BII) Tutorial

UNDERSTANDING HEALTHCARE FINANCIAL MANAGEMENT Calculator (Hewlett-Packard 10BII) Tutorial To begin, look at the face of the calculator. Most keys (except a few) have two functions: Each key s primary function

### HOW TO USE YOUR HP 12 C CALCULATOR

HOW TO USE YOUR HP 12 C CALCULATOR This document is designed to provide you with (1) the basics of how your HP 12C financial calculator operates, and (2) the typical keystrokes that will be required on

### CALCULATOR TUTORIAL. Because most students that use Understanding Healthcare Financial Management will be conducting time

CALCULATOR TUTORIAL INTRODUCTION Because most students that use Understanding Healthcare Financial Management will be conducting time value analyses on spreadsheets, most of the text discussion focuses

### Discounted Cash Flow Valuation

Discounted Cash Flow Valuation Chapter 5 Key Concepts and Skills Be able to compute the future value of multiple cash flows Be able to compute the present value of multiple cash flows Be able to compute

### Texas Instruments BA II Plus. Calculator tutorial

Chartered Financial Analyst Program Texas Instruments BA II Plus calculator tutorial Nicholas J Blain, CFA Chief Executive Quartic Training 1 outline 0. Calculator setup and introduction 1. Basic algebra

### The Time Value of Money

The following is a review of the Quantitative Methods: Basic Concepts principles designed to address the learning outcome statements set forth by CFA Institute. This topic is also covered in: The Time

### Hewlett-Packard 17BII Tutorial

To begin, look at the face of the calculator. Most keys on the 17BII have two functions: a key's primary function is noted in white on the key itself, while the key's secondary function is noted in gold

### Hewlett-Packard 10BII Tutorial

This tutorial has been developed to be used in conjunction with Brigham and Houston s Fundamentals of Financial Management 11 th edition and Fundamentals of Financial Management: Concise Edition. In particular,

### Time Value of Money. Reading 5. IFT Notes for the 2015 Level 1 CFA exam

Time Value of Money Reading 5 IFT Notes for the 2015 Level 1 CFA exam Contents 1. Introduction... 2 2. Interest Rates: Interpretation... 2 3. The Future Value of a Single Cash Flow... 4 4. The Future Value

### Introduction to the Hewlett-Packard (HP) 10BII Calculator and Review of Mortgage Finance Calculations

Introduction to the Hewlett-Packard (HP) 10BII Calculator and Review of Mortgage Finance Calculations Real Estate Division Sauder School of Business University of British Columbia Introduction to the Hewlett-Packard

### hp calculators HP 17bII+ Discounting & Discounted Cash Flow Analysis It's About Time The Financial Registers versus Discounted Cash Flow

HP 17bII+ Discounting & Discounted Cash Flow Analysis It's About Time The Financial Registers versus Discounted Cash Flow Discounting a Single Sum Discounting and Compounding Discounting a Series of Sums

### Key Concepts and Skills. Multiple Cash Flows Future Value Example 6.1. Chapter Outline. Multiple Cash Flows Example 2 Continued

6 Calculators Discounted Cash Flow Valuation Key Concepts and Skills Be able to compute the future value of multiple cash flows Be able to compute the present value of multiple cash flows Be able to compute

### Time Value of Money. 2014 Level I Quantitative Methods. IFT Notes for the CFA exam

Time Value of Money 2014 Level I Quantitative Methods IFT Notes for the CFA exam Contents 1. Introduction... 2 2. Interest Rates: Interpretation... 2 3. The Future Value of a Single Cash Flow... 4 4. The

### PV Tutorial Using Calculator (Sharp EL-738)

EYK 15-2 PV Tutorial Using Calculator (Sharp EL-738) TABLE OF CONTENTS Calculator Configuration and Abbreviations Exercise 1: Exercise 2: Exercise 3: Exercise 4: Exercise 5: Exercise 6: Exercise 7: Exercise

### Math Workshop Algebra (Time Value of Money; TVM)

Math Workshop Algebra (Time Value of Money; TVM) FV 1 = PV+INT 1 = PV+PV*I = PV(1+I) = \$100(1+10%) = \$110.00 FV 2 = FV 1 (1+I) = PV(1+I)(1+I) = PV(1+I) 2 =\$100(1.10) 2 = \$121.00 FV 3 = FV 2 (1+I) = PV(1

### The Mathematics of Financial Planning (supplementary lesson notes to accompany FMGT 2820)

The Mathematics of Financial Planning (supplementary lesson notes to accompany FMGT 2820) Using the Sharp EL-738 Calculator Reference is made to the Appendix Tables A-1 to A-4 in the course textbook Investments:

### Hewlett-Packard 10B Tutorial

To begin, look at the face of the calculator. Every key (except one, the gold shift key) on the 10B has two functions: each key's primary function is noted in white on the key itself, while each key's

### BUSI 121 Foundations of Real Estate Mathematics

Real Estate Division BUSI 121 Foundations of Real Estate Mathematics SESSION 2 By Graham McIntosh Sauder School of Business University of British Columbia Outline Introduction Cash Flow Problems Cash Flow

### Prepared by: Dalia A. Marafi Version 2.0

Kuwait University College of Business Administration Department of Finance and Financial Institutions Using )Casio FC-200V( for Fundamentals of Financial Management (220) Prepared by: Dalia A. Marafi Version

### Chapter 5 & 6 Financial Calculator and Examples

Chapter 5 & 6 Financial Calculator and Examples Konan Chan Financial Management, Spring 2016 Five Factors in TVM Present value: PV Future value: FV Discount rate: r Payment: PMT Number of periods: N Get

### BA II PLUS Calculator

BA II PLUS Calculator 1997, 2002 Texas Instruments Incorporated Important Texas Instruments makes no warranty, either expressed or implied, including but not limited to any implied warranties of merchantability

### hp calculators HP 12C Net Present Value Cash flow and NPV calculations Cash flow diagrams The HP12C cash flow approach Practice solving NPV problems

Cash flow and NPV calculations Cash flow diagrams The HP12C cash flow approach Practice solving NPV problems How to modify cash flow entries Cash Flow and NPV calculations Cash flow analysis is an extension

### substantially more powerful. The internal rate of return feature is one of the most useful of the additions. Using the TI BA II Plus

for Actuarial Finance Calculations Introduction. This manual is being written to help actuarial students become more efficient problem solvers for the Part II examination of the Casualty Actuarial Society

### BA II PLUS Calculator

BA II PLUS Calculator Important Information Texas Instruments makes no warranty, either express or implied, including but not limited to any implied warranties of merchantability and fitness for a particular

### Compounding Assumptions. Compounding Assumptions. Financial Calculations on the Texas Instruments BAII Plus. Compounding Assumptions.

Compounding Assumptions Financial Calculations on the Texas Instruments BAII Plus This is a first draft, and may contain errors. Feedback is appreciated The TI BAII Plus has built-in preset assumptions

### The Mathematics of Financial Planning (supplementary lesson notes to accompany FMGT 2820)

The Mathematics of Financial Planning (supplementary lesson notes to accompany FMGT 2820) Using the Sharp EL-733A Calculator Reference is made to the Appendix Tables A-1 to A-4 in the course textbook Investments:

### Sharp EL-733A Tutorial

To begin, look at the face of the calculator. Almost every key on the EL-733A has two functions: each key's primary function is noted on the key itself, while each key's secondary function is noted in

### Purpose EL-773A HP-10B BA-II PLUS Clear memory 0 n registers

D-How to Use a Financial Calculator* Most personal finance decisions involve calculations of the time value of money. Three methods are used to compute this value: time value of money tables (such as those

### To switch back to the ordinary annuity mode, enter

HANDBOOK: HOW TO USE YOUR HP 12C CALCULATOR This document is designed to provide you with (1) the basics of how your HP 12C financial calculator operates, and (2) the typical keystrokes that will be required

### 1. If you wish to accumulate \$140,000 in 13 years, how much must you deposit today in an account that pays an annual interest rate of 14%?

Chapter 2 - Sample Problems 1. If you wish to accumulate \$140,000 in 13 years, how much must you deposit today in an account that pays an annual interest rate of 14%? 2. What will \$247,000 grow to be in

### hp calculators HP 12C Internal Rate of Return Cash flow and IRR calculations Cash flow diagrams The HP12C cash flow approach

Cash flow and IRR calculations Cash flow diagrams The HP12C cash flow approach Practice with solving cash flow problems related to IRR How to modify cash flow entries Cash Flow and IRR calculations Cash

### Time Value of Money. 2014 Level I Quantitative Methods. IFT Notes for the CFA exam

Time Value of Money 2014 Level I Quantitative Methods IFT Notes for the CFA exam Contents 1. Introduction...2 2. Interest Rates: Interpretation...2 3. The Future Value of a Single Cash Flow...4 4. The

### Topics. Chapter 5. Future Value. Future Value - Compounding. Time Value of Money. 0 r = 5% 1

Chapter 5 Time Value of Money Topics 1. Future Value of a Lump Sum 2. Present Value of a Lump Sum 3. Future Value of Cash Flow Streams 4. Present Value of Cash Flow Streams 5. Perpetuities 6. Uneven Series

### Chapter 8. Present Value Mathematics for Real Estate

Chapter 8 Present Value Mathematics for Real Estate Real estate deals almost always involve cash amounts at different points in time. Examples: Buy a property now, sell it later. Sign a lease now, pay

### REVIEW MATERIALS FOR REAL ESTATE ANALYSIS

REVIEW MATERIALS FOR REAL ESTATE ANALYSIS 1997, Roy T. Black REAE 5311, Fall 2005 University of Texas at Arlington J. Andrew Hansz, Ph.D., CFA CONTENTS ITEM ANNUAL COMPOUND INTEREST TABLES AT 10% MATERIALS

### Time-Value-of-Money and Amortization Worksheets

2 Time-Value-of-Money and Amortization Worksheets The Time-Value-of-Money and Amortization worksheets are useful in applications where the cash flows are equal, evenly spaced, and either all inflows or

### Oklahoma State University Spears School of Business. Time Value of Money

Oklahoma State University Spears School of Business Time Value of Money Slide 2 Time Value of Money Which would you rather receive as a sign-in bonus for your new job? 1. \$15,000 cash upon signing the

### Chapter The Time Value of Money

Chapter The Time Value of Money PPT 9-2 Chapter 9 - Outline Time Value of Money Future Value and Present Value Annuities Time-Value-of-Money Formulas Adjusting for Non-Annual Compounding Compound Interest

### Notes on the SHARP EL-738 calculator

Chapter 1 Notes on the SHARP EL-738 calculator General The SHARP EL-738 calculator is recommended for this module. The advantage of this calculator is that it can do basic calculations, financial calculations

### Key Concepts and Skills. Chapter Outline. Basic Definitions. Future Values. Future Values: General Formula 1-1. Chapter 4

Key Concepts and Skills Chapter 4 Introduction to Valuation: The Time Value of Money Be able to compute the future value of an investment made today Be able to compute the present value of cash to be received

### BA II PLUS PROFESSIONAL Calculator

BA II PLUS PROFESSIONAL Calculator Important Information Texas Instruments makes no warranty, either express or implied, including but not limited to any implied warranties of merchantability and fitness

### TVM Appendix B: Using the TI-83/84. Time Value of Money Problems on a Texas Instruments TI-83 1

Before you start: Time Value of Money Problems on a Texas Instruments TI-83 1 To calculate problems on a TI-83, you have to go into the applications menu, the blue APPS key on the calculator. Several applications

### BA-35 Solar Quick Reference Guide

BA-35 Solar Quick Reference Guide Table of Contents General Information... 2 The Display... 4 Arithmetic Operations... 6 Correcting Errors... 7 Display Formats... 8 Memory Operations... 9 Math Operations...

### CHAPTER 9 Time Value Analysis

Copyright 2008 by the Foundation of the American College of Healthcare Executives 6/11/07 Version 9-1 CHAPTER 9 Time Value Analysis Future and present values Lump sums Annuities Uneven cash flow streams

### Ehrhardt Chapter 8 Page 1

Chapter 2 Time Value of Money 1 Time Value Topics Future value Present value Rates of return Amortization 2 Time lines show timing of cash flows. 0 1 2 3 I% CF 0 CF 1 CF 2 CF 3 Tick marks at ends of periods,

### PV Tutorial Using Excel

EYK 15-3 PV Tutorial Using Excel TABLE OF CONTENTS Introduction Exercise 1: Exercise 2: Exercise 3: Exercise 4: Exercise 5: Exercise 6: Exercise 7: Exercise 8: Exercise 9: Exercise 10: Exercise 11: Exercise

### CHAPTER 2. Time Value of Money 2-1

CHAPTER 2 Time Value of Money 2-1 Time Value of Money (TVM) Time Lines Future value & Present value Rates of return Annuities & Perpetuities Uneven cash Flow Streams Amortization 2-2 Time lines 0 1 2 3

### Module 5: Interest concepts of future and present value

file:///f /Courses/2010-11/CGA/FA2/06course/m05intro.htm Module 5: Interest concepts of future and present value Overview In this module, you learn about the fundamental concepts of interest and present

### 1.4 Interest-Rate calculations and returns

.4 Interest-Rate calculations and returns Effective Annual Rate (EAR) The Effective Annual Rate (EAR) is the actual rate paid (or received) after accounting for compounding that occurs during the year

### Module 5: Interest concepts of future and present value

Page 1 of 23 Module 5: Interest concepts of future and present value Overview In this module, you learn about the fundamental concepts of interest and present and future values, as well as ordinary annuities

### Chapter 4 Time Value of Money ANSWERS TO END-OF-CHAPTER QUESTIONS

Chapter 4 Time Value of Money ANSWERS TO END-OF-CHAPTER QUESTIONS 4-1 a. PV (present value) is the value today of a future payment, or stream of payments, discounted at the appropriate rate of interest.

### BEST INTEREST RATE. To convert a nominal rate to an effective rate, press

FINANCIAL COMPUTATIONS George A. Jahn Chairman, Dept. of Mathematics Palm Beach Community College Palm Beach Gardens Location http://www.pbcc.edu/faculty/jahng/ The TI-83 Plus and TI-84 Plus have a wonderful

### Lease Analysis Tools

Lease Analysis Tools 2009 ELFA Lease Accountants Conference Presenter: Bill Bosco, Pres. wbleasing101@aol.com Leasing 101 914-522-3233 Overview Math of Finance Theory Glossary of terms Common calculations

### Chapter 7 SOLUTIONS TO END-OF-CHAPTER PROBLEMS

Chapter 7 SOLUTIONS TO END-OF-CHAPTER PROBLEMS 7-1 0 1 2 3 4 5 10% PV 10,000 FV 5? FV 5 \$10,000(1.10) 5 \$10,000(FVIF 10%, 5 ) \$10,000(1.6105) \$16,105. Alternatively, with a financial calculator enter the

### Chapter 4: Time Value of Money

Chapter 4: Time Value of Money BASIC KEYS USED IN FINANCE PROBLEMS The following two key sequences should be done before starting any "new" problem: ~ is used to separate key strokes (3~N: enter 3 then

### BA II Plus. Guidebook. Texas Instruments Instructional Communications. Dave Caldwell David Santucci Gary Von Berg

BA II Plus Guidebook Guidebook developed by: Texas Instruments Instructional Communications With contributions by: Dave Caldwell David Santucci Gary Von Berg 1997 by Texas Instruments Incorporated. Important

### Integrated Case. 5-42 First National Bank Time Value of Money Analysis

Integrated Case 5-42 First National Bank Time Value of Money Analysis You have applied for a job with a local bank. As part of its evaluation process, you must take an examination on time value of money

### The Time Value of Money

C H A P T E R6 The Time Value of Money When plumbers or carpenters tackle a job, they begin by opening their toolboxes, which hold a variety of specialized tools to help them perform their jobs. The financial

### Introduction to the Time Value of Money

Module 3 Introduction to the Time Value of Money David Mannaioni CPCU, CLU, ChFC, CFP 7483 This publication may not be duplicated in any way without the express written consent of the publisher. The information

### A Textual Explanation

NAVIGATION INSTRUCTIONS GLOSSARY FINANCIAL CALCULATIONS FOR LAWYERS LECTURES INDEX INTRODUCTION PRESENT VALUE OF A SUM FUTURE VALUE OF A SUM SINKING FUND AMORTIZATION WITH CHART PRESENT VALUE OF AN ANNUITY

### Excel Financial Functions

Excel Financial Functions PV() Effect() Nominal() FV() PMT() Payment Amortization Table Payment Array Table NPer() Rate() NPV() IRR() MIRR() Yield() Price() Accrint() Future Value How much will your money

### Fixed Income: Practice Problems with Solutions

Fixed Income: Practice Problems with Solutions Directions: Unless otherwise stated, assume semi-annual payment on bonds.. A 6.0 percent bond matures in exactly 8 years and has a par value of 000 dollars.

### Gordon Guides For the LLQP Exam. Financial Math

Financial Math, candidates are expected to have a high degree of understanding of time value of money principles, security valuation and basic statistics. Formulas are provided on the exam, therefore do

### ANNUITIES. Ordinary Simple Annuities

An annuity is a series of payments or withdrawals. ANNUITIES An Annuity can be either Simple or General Simple Annuities - Compounding periods and payment periods coincide. General Annuities - Compounding

### Ordinary Annuities Chapter 10

Ordinary Annuities Chapter 10 Learning Objectives After completing this chapter, you will be able to: > Define and distinguish between ordinary simple annuities and ordinary general annuities. > Calculate

### Problem Set: Annuities and Perpetuities (Solutions Below)

Problem Set: Annuities and Perpetuities (Solutions Below) 1. If you plan to save \$300 annually for 10 years and the discount rate is 15%, what is the future value? 2. If you want to buy a boat in 6 years

### TI-86 Financial Functions

TI-86 Financial Functions Loading and Installing Finance Features on Your TI-86... 2 Loading the Finance Features into TI-86 Memory... 2 Installing the Finance Features for Use... 2 Displaying the FIN

### Time Value of Money Problems

Time Value of Money Problems 1. What will a deposit of \$4,500 at 10% compounded semiannually be worth if left in the bank for six years? a. \$8,020.22 b. \$7,959.55 c. \$8,081.55 d. \$8,181.55 2. What will

### Chapter 2 Applying Time Value Concepts

Chapter 2 Applying Time Value Concepts Chapter Overview Albert Einstein, the renowned physicist whose theories of relativity formed the theoretical base for the utilization of atomic energy, called the

### The values in the TVM Solver are quantities involved in compound interest and annuities.

Texas Instruments Graphing Calculators have a built in app that may be used to compute quantities involved in compound interest, annuities, and amortization. For the examples below, we ll utilize the screens

### Dick Schwanke Finite Math 111 Harford Community College Fall 2013

Annuities and Amortization Finite Mathematics 111 Dick Schwanke Session #3 1 In the Previous Two Sessions Calculating Simple Interest Finding the Amount Owed Computing Discounted Loans Quick Review of

### Chapter 28 Time Value of Money

Chapter 28 Time Value of Money Lump sum cash flows 1. For example, how much would I get if I deposit \$100 in a bank account for 5 years at an annual interest rate of 10%? Let s try using our calculator:

### TT03 Financial Calculator Tutorial And Key Time Value of Money Formulas November 6, 2007

TT03 Financial Calculator Tutorial And Key Time Value of Money Formulas November 6, 2007 The purpose of this tutorial is to help students who use the HP 17BII+, and HP10bll+ calculators understand how

### Financial Math on Spreadsheet and Calculator Version 4.0

Financial Math on Spreadsheet and Calculator Version 4.0 2002 Kent L. Womack and Andrew Brownell Tuck School of Business Dartmouth College Table of Contents INTRODUCTION...1 PERFORMING TVM CALCULATIONS

### Time Value of Money. Nature of Interest. appendix. study objectives

2918T_appC_C01-C20.qxd 8/28/08 9:57 PM Page C-1 appendix C Time Value of Money study objectives After studying this appendix, you should be able to: 1 Distinguish between simple and compound interest.

### Chapter 8. 48 Financial Planning Handbook PDP

Chapter 8 48 Financial Planning Handbook PDP The Financial Planner's Toolkit As a financial planner, you will be doing a lot of mathematical calculations for your clients. Doing these calculations for

### Foundation review. Introduction. Learning objectives

Foundation review: Introduction Foundation review Introduction Throughout FN1, you will be expected to apply techniques and concepts that you learned in prerequisite courses. The purpose of this foundation