SUPPLEMENTARY NOTES. For examination purposes, the following amendments shall take effect from 3 June 2011: 1. Chapter 12, Page 329, Chapter Outline

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1 SUPPLEMENTARY NOTES ChFC01 Fundamentals Of Financial Planning And Investments Date Of Issue : 3 May 2011 [Applicable to 1 st Edition (2003), Re-printed March 2006 version and earlier] The following amendments have NOT been incorporated in the textbook. They should be marked up in your textbook immediately. For examination purposes, the following amendments shall take effect from 3 June 2011: 1. Chapter 12, Page 329, Chapter Outline To delete Capital Protected Fund from the chapter outline. 2. Chapter 12, Page 338, Section 4 3. Chapter 12, Page 339, Section 4.2 To replace the entire Section 4 with the following section: INNOVATIVE UNIT TRUSTS SCHEME Owing to the historically low interest rates and the dismal performance of equities in recent years, fund houses have introduced some innovative unit trusts that aim to preserve the capital of investors and at the same time enhance the returns that they would have otherwise earned from keeping their money in deposits. This includes capital guaranteed funds. To delete the entire Section Chapter 7, Page 244, Section 2.2, 2. Chapter 8, Page 259, Section 5.1 Date Of Issue : May nd Paragraph Liabilities are normally reported at original cost, showing the amount of principal. should read as Liabilities are normally reported at outstanding loan value." 5 th Paragraph Delete the sentence: If he does not have the 20-percent down payment to buy the car, leasing may be a solution." Singapore College of Insurance 9 Temasek Boulevard, #14-01/02/03/04, Suntec Tower Two, Singapore Tel: (65) Fax: (65) Website:

2 3. Chapter 9, Page 280, Section 3.3 after-tax HPR i) = or 7.88% should read as = or 8.78% ii) Charles held the investment for only one-half of a year and achieved the same results, his 7.69 after-tax HPR should be multiplied by 2. This results in an annualised after-tax HPR of percent (7.69 x 2)... should read as Charles held the investment for only one-half of a year and achieved the same results, his 8.78 after-tax HPR should be multiplied by 2. This results in an annualised after-tax HPR of percent (8.78 x 2) Chapter 15, Page 406 to 407, Section 8.4 Replace the entire section with the following: A unit trust is an investment scheme that pools money from numerous investors to invest in a portfolio of securities such as shares, bonds and short-term instruments. There is no capital gains tax in Singapore unless the gains are derived from a trade of buying and selling investments in unit trusts. In general, the tax treatment of the distribution of unit trusts is as follows: For a Singapore resident individual investor, the distributions will be exempted from tax if the distributions are not considered as gains or profits from any trade, business or profession, or derived through a partnership in Singapore. For a Singapore resident institutional investor, or if the distributions are considered as gains or profits from any trade, business or profession, or derived through a partnership in Singapore, the distributions will be taxed. For a non-resident investor, the distributions will be exempted from tax. Non-resident investors should seek professional advice regarding the legal and taxation implications in their country of citizenship or residence. 5. Chapter 15, Page 412, Section Chapter 15, Page 413 to 415, Section 11.3 Delete Section Delete Sections 11.3, 11.4, 11.5 and Singapore College of Insurance 9 Temasek Boulevard, #14-01/02/03/04, Suntec Tower Two, Singapore Tel: (65) Fax: (65) Website:

3 FOR STUDENTS USING CASIO CALCULATORS BELOW ARE THE STEPS ON HOW TO USE YOUR CALCULATORS FOR THE CALCULATIONS IN CHAPTERS 5 & 6 CHAPTER 5 TIME VALUE OF MONEY BASIC CONCEPTS AND APPLICATIONS Section Using The Casio 100 & 200 Calculators 6th paragraph page 136 To return to the example given earlier, assume you wish to know the amount of which a single sum of $5,000 will grow in 7 years at 9% compound interest. These three known values should be entered into the calculator. They may be entered in the following order: /- PV (-)5000 PV n 7 7 n i% 9 9 i% 9.00 COMP FV COMP FV EXE th paragraph page 137 If you wish to change one of the data items in the problem, you may do so without reentering all the information. For example, if you wish to recalculate the same problem with a 5-year compounding period, simply carry out the following steps: 5 n n 5.00 COMP FV COMP FV EXE Section 3.3 Computing n Or i 4th paragraph page i% i% FV FV /- PV (-)1200 PV COMP n COMP n EXE th paragraph page n 5 5 n /- PV (-)6000 PV FV ,000 FV COMP i% % COMP i% EXE

4 Section 4.3 Computing PVSS With A Financial Calculator 2nd paragraph page FV FV i% i% n 6 6 n 6.00 COMP PV COMP PV EXE Section 4.5 Computing n Or i 3rd paragraph page n 2 2 n /- PV (-)4750 PV FV FV COMP i% COMP i% EXE st paragraph page i% 8 8 i% /- PV (-)4750 PV FV FV COMP n COMP n EXE 1.00 Section 5.4 Using A Financial Calculator To Compute FVA And FVAD Paragraph 2 page 148 BGN - BGN SHIFT BGN - BGN /- PMT (-)5000 PMT n 5 5 n i% 8 8 i% 8.00 COMP FV COMP FV EXE /- PMT (-)5000 PMT n 5 5 n i% 8 8 i% 8.00 COMP FV COMP FV EXE

5 Section 5.6 Solving Sinking Fund Problems Paragraph 3 page 150 BGN - BGN SHIFT BGN - BGN FV FV i% 9 9 i% n 3 3 n 3.00 COMP PMT COMP PMT EXE Paragraph 5 page FV FV i% i% /- PMT (-)1200 PMT COMP n COMP n EXE 7.00 Paragraph 6 page FV FV /- PMT (-)1200 PMT n 5 5 n 5.00 COMP i% COMP i% EXE Using A Financial Calculator To Compute PVA And PVAD 3rd paragraph page /- PMT (-)1500 PMT n 6 6 n i% 7 7 i% 7.00 COMP PV COMP PV EXE st paragraph page 156 BGN - BGN SHIFT BGN - BGN /- PMT (-) 1500 PMT n 6 6 n i% 7 7 i% 7.00 COMP PV COMP PV EXE

6 6.6.2 Using A Financial Calculator 6th paragraph page /- PV (-) PV i% 8 8 i% n n COMP PMT 17, COMP PMT EXE 17, nd paragraph page /- PV (-) PV PMT PMT i% i% COMP n COMP n EXE rd paragraph page /- PV (-) PV PMT PMT n 4 4 n 4.00 COMP i% 3.92 COMP i% EXE 3.92 Section Creating An Amortization Schedule Paragraph 5 page PV PV i% i% n 4 4 n 4.00 COMP PMT COMP PMT EXE AMRT PRN 1 EXE AMRT INT 1 EXE AMRT SHIFT BAL 1 EXE AMRT PRN 2 EXE AMRT INT 2 EXE AMRT SHIFT BAL 2 EXE AMRT PRN 3 EXE AMRT INT 3 EXE AMRT SHIFT BAL 3 EXE AMRT PRN 4 EXE AMRT INT 4 EXE AMRT 0.00 SHIFT BAL 4 EXE

7 Section 7 Cash Flow Structures Involving Single Sums And Annuities Paragraph 5 page /- PV (-) 1000 PV /- PMT -300 (-) 300 PMT n 3 3 n i% 7 7 i% 7.00 COMP FV COMP FV EXE FV FV /- PMT -300 (-) 300 PMT n 3 3 n i% 7 7 i% 7.00 COMP PV COMP PV EXE Paragraph 6 page FV FV /- PV -920 (-) 920 PV n 6 6 n PMT PMT COMP i% 9.83 COMP i% EXE

8 Appendix 5B KEYSTROKES FOR SOLVING SELECTED TVM PROBLEMS USING CASIO 200 CALCULATOR The individual keystrokes in this appendix are separated by commas: 1. Preliminary housekeeping and miscellaneous chores: a. Set calculator to financial calculation mode Mode 4 b. Clearing memory SHIFT, AC, EXE c. Set the number of decimal places to be displayed MODE, 7, n, EXE 2. Future value of a single sum problems a. Finding FVSS (-), amount of present value, PV, number of periods, n, interest rate, i%, COMP, FV, EXE interest rate, i%, amount of future value, FV, (-), amount of present value, PV, COMP, n, EXE c. Finding i (-), amount of present value, PV, amount of future value, FV, number of periods, n, COMP, i%, EXE 3. Present value of a single sum problems a. Finding PVSS amount of future value, FV, interest rate, i%, number of periods, n, COMP, PV, EXE see 2b above c. Finding i% see 2c above 4. Future value of annuity problems a. Finding FVA Set calculator to end-of-period payments (press SHIFT, BGN if BGN is displayed on calculator), (-) amount of one payment, interest rate, i%, number of payments, n, COMP, FV, EXE Set calculator to end-of-period payments (see a above), future value of the annuity, FV, (-), amount of one payment, PMT, interest rate, i%, COMP, n, EXE c. Finding i Set calculator to end-of-period payments (see a above), future value of the annuity, FV, (-), amount of one payment, PMT, number of payments, n, COMP, i%, EXE 5. Future value of annuity due problems a. Finding FVAD Set calculator to beginning-of-period payments (press SHIFT BGN), (-), amount of one payment, PMT, interest rate, i%, number of payments, n, COMP, FV, EXE Set calculator to beginning-of-period payments (press SHIFT BGN), (-), amount of one payment, PMT, interest rate, i%, future value of an annuity due, COMP, n, EXE c. Finding i% Set calculator to beginning-of-period payments (press SHIFT BGN), (-), amount of one payment, PMT, future value of an annuity due, number of payments, n, COMP, i%, EXE 6

9 6. Sinking Fund Problems a. Finding sinking fund payment Set calculator to beginning or end-of-period payments according to what is stated in the question target amount of sinking fund, FV, interest rate, i%, number of payments, n, COMP, PMT, EXE Set calculator to beginning or end-of-period payments as indicated in the question target amount of sinking fund, FV, interest rate, i%, (-), amount of one payment, PMT, COMP, n, EXE c. Finding i% Set calculator to beginning or end-of-period payments as indicated in the question target amount of sinking fund, FV, number of payments, n, (-), amount of one payment, PMT, COMP, n, EXE 7. Present Value Of An Annuity Problem a. Finding PVA Set calculator to end-of-period payments (-), amount of one payment, PMT, interest rate, i%, number of payments, n, COMP, PV, EXE Set calculator to end-of-period payments amount of one payment, PMT, interest rate, i%, (-) present value of the annuity, PV, COMP, PV, EXE c. Finding i Set calculator to end-of-period payments amount of one payment, PMT, (-), present value of the annuity, PV, number of payments, n, COMP, PV, EXE 8. Present Value Of An Annuity Due Problem a. Finding PVAD Set the calculator to beginning-of-period payments (-) amount of one payment, PMT, interest rate, i%, number of payments, n, COMP, PV, EXE Set the calculator to beginning-of-period payments amount of one payment, PMT, interest rate, i%, (-) present value of the annuity, PV, COMP, n, EXE c. Finding i% Set the calculator to beginning-of-period payments amount of one payment, PMT, number of payments, n, (-) present value of the annuity, PV, COMP, i%, EXE 9. Debt Service/Capital Sum Liquidation Problems a. Finding the payment Set the calculator to beginning or end-of-period payments according to what is stated in the question (-) beginning amount of loan or capital sum, PV, interest rate, i%, number of payments, n, COMP, PMT, EXE Set the calculator to beginning or end-of-period payments according to what is stated in the question (-) beginning amount of loan or capital sum, PV, interest rate, i%, amount of one payment, PMT, COMP, n, EXE c. Finding i% Set the calculator to beginning or end-of-period payments according to what is stated in the question (-) beginning amount of loan or capital sum, PV, number of payments, n, amount of one payment, PMT, COMP, n, EXE d. Creating an amortization schedule Set the calculator to end-of-period payments mortgage amount, PV, interest rate, i%, term, n, COMP, PMT, EXE, 7

10 PRN, n, EXE, INT, n, EXE, SHIFT, BAL, EXE 10. Present Value Of Uneven Cash Flows Problems (Note: Each cash flow should be entered as a positive or negative amount, depending on whether it is an inflow or outflow) a. Cash flows at end of period: ungrouped data Mode 7, 2, EXE, 0, EXE, SHIFT, AC, EXE 0, CFj, amount of first cash flow, CFj, amount of second cash flow, CFj, amount of third cash flow, CFj, etc., interest rate, i%, NPV, EXE b. Cash flows at end of period: grouped data Mode 7, 2, EXE, 0, EXE, SHIFT, AC, EXE 0, CFj, amount of first cash flow, CFj, amount of second cash flow, CFj, amount of third to nth cash flow, CFjnNj etc., interest rate, i%, NPV, EXE c. Cash flows at beginning of period: ungrouped data Mode 7, 2, EXE, 0, EXE, SHIFT, AC, EXE amount of first cash flow, CFj, amount of second cash flow, CFj, amount of third cash flow, CFj, etc., interest rate, i%, NPV, EXE d. Cash flows at beginning of period: grouped data Mode 7, 2, EXE, 0, EXE, SHIFT, AC, EXE amount of first cash flow, CFj, amount of second cash flow, CFj, amount of third to nth cash flow, CFjnNj, etc., interest rate, i%, NPV, EXE 11. Future value of uneven cash flows problems a. Generally Compute present value as in 10(a) (d) above, then (-), amount of present value, PV, number of payments, n, interest rate, i%, COMP, FV, EXE 12. Net present value problems (Note: Typically the first cash flow is an outflow and thus is entered as a negative. In some problems one or more of the subsequent cash flows also are outflows. They too should be entered as negatives, though this is not shown in the keystroke sequence below.) a. Ungrouped data Mode 7, 2, EXE, 0, EXE, SHIFT, AC, EXE (-)amount of initial outflow, CFj, amount of second cash flow, CFj, amount of third cash flow, CFj, etc., interest rate, i%, NPV, EXE b. Grouped data Mode 7, 2, EXE, 0, EXE, SHIFT, AC, EXE (-)amount of initial outflow, CFj, amount of second cash flow, CFj, amount of third to nth cash flow, CFjnNj, etc., interest rate, i%, NPV, EXE 13. Internal rate of return problems Same as NPV except for the last step, instead of punching NPV, EXE, to punch IRR, EXE 14. Conversion of nominal interest rate to effective interest rate problems Mode, 7, 4, EXE, 0 EXE, SHIFT, AC, EXE Number of compounding periods per year, SHIFT, EFF, nominal interest rate, EXE 8

11 CHAPTER 6 TIME VALUE OF MONEY ADVANCED CONCEPTS AND APPLICATIONS Section Using A Financial Calculator To Solve Problems With Uneven Cash Flows 2nd paragraph page 193 Mode 4 Mode 6 SHIFT 0 Mode 7 2 EXE 0 EXE 0.00 AC SHIFT AC EXE 0 CFj 0 0 CFj CFj 0 0 CFj CFj CFj CFj CFj CFj CFj CFj CFj i% i% NPV NPV EXE Solving Problems That Include Grouped Cash Flows 2nd paragraph page 194 Mode 4 Mode 6 SHIFT 0 Mode 7 2 EXE 0 EXE 0.00 AC SHIFT AC EXE 0 CFj 0 0 CFj CFj 5 Nj CFj 5 Nj CFj10Nj CFj10Nj CFj15Nj CFj15Nj CFj CFj i% 8 8 i% 8.00 NPV NPV EXE nd paragraph page 195 Mode 4 Mode 6 SHIFT 0 Mode 7 2 EXE 0 EXE 0.00 AC SHIFT AC EXE 3500 CFj5Nj CFj5Nj CFj5Nj CFj5Nj CFj CFj CFj CFj i% i% NPV NPV EXE Section Payments Growing By A Constant Percentage 4th paragraph page 196 Section Using A Financial Calculator To Calculate The Future Value Of Uneven cash Flows 9

12 Paragraph 2 page 198 Mode 4 Mode 6 SHIFT 0 Mode 7 2 EXE 0 EXE 0.00 AC SHIFT AC EXE 0 CFj 0 0 CFj CFj CFj CFj4Nj CFj4Nj CFj3Nj CFj3Nj i% 7 7 i% 7.00 NPV NPV EXE Paragraph 5 page /- PV (-) PV n 8 8 n i% 7 7 i% 7.00 COMP FV COMP FV EXE Section Ungrouped Cash Flows Paragraph 3 page 207 Mode 4 Mode 6 SHIFT 0 Mode 7 2 EXE 0 EXE 0.00 AC SHIFT AC EXE /- CFj (-)75000 CFj CFj 0 0 CFj CFj CFj CFj CFj CFj CFj CFj CFj i% i% NPV NPV EXE Paragraph 4 page i% 5 5 i% 5.00 NPV NPV EXE

13 Section Grouped Cash Flow Paragraph 3 page 208 Mode 4 Mode 6 SHIFT 0 Mode 7 2 EXE 0 EXE 0.00 AC SHIFT AC EXE /- CFj (-)50000 CFj CFj5Nj 5 0 CFj5Nj CFj4Nj CFj4Nj CFj CFj i% i% NPV NPV EXE Section Using Financial Calculators To Solve IRR Problems Paragraph 5 page 209 Mode 4 Mode 6 SHIFT 0 Mode 7 2 EXE 0 EXE AC SHIFT AC EXE /- CFj (-) CFj CFj5Nj CFj5Nj IRR IRR EXE Paragraph 4 page 210 Mode 4 Mode 6 SHIFT 0 Mode 7 2 EXE 0 EXE AC SHIFT AC EXE /- CFj (-)60000 CFj CFj CFj CFj4Nj CFj4Nj /- CFj /- CFj CFj CFj CFj 0 0 CFj CFj CFj CFj CFj IRR IRR EXE Section 3.2 Calculating The Effective Annual Rate Paragraph 4 page 216 AC MODE MODE 7 4 EXE 0 EXE EFF 7= SHIFT AC EXE SHIFT EFF7EXE

14 Section Adjusting The Nominal Rate And Number Of Periods Paragraph 1 page 221 Mode 1 Mode 6 SHIFT 0 Mode 7 2 EXE 0 EXE 0.00 AC SHIFT AC EXE /- PV (-)15000 PV x 52 = n x 52 n = i% i% 0.15 COMP FV COMP FV EXE

15 FOR STUDENTS USING CASIO FC100V CALCULATOR BELOW ARE THE STEPS ON HOW TO USE YOUR CALCULATOR FOR THE CALCULATIONS IN CHAPTERS 5 & 6 CHAPTER 5 TIME VALUE OF MONEY BASIC CONCEPTS AND APPLICATIONS Terms used: 1. PV: present value of money 2. FV: future value of money 3. n: number of periods 4. I%: interest rate 5. PMT: periodic payments (annuities) Display indicators: 1. AMRT : press this key for amortization calculations 2. CASH : press this key for cash flow calculations 3. CMPD : press this key for compound interest calculations 4. CNVR : press this key for interest rate conversion calculations Section Using The Casio 100V Calculator 6th paragraph page 136 To return to the example given earlier, assume you wish to know the amount of which a single sum of $5,000 will grow in 7 years at 9% compound interest. These three known values should be entered into the calculator. They may be entered in the following order: 2. ( down ) 3. 7, EXE (set n=7) 4. 9, EXE (set I%=9) , EXE (set PV= 5000) 6. ( FV is highlighted) 7. SOLVE (FV= ) 7th paragraph page 137 If you wish to change one of the data items in the problem, you may do so without re-entering all the information. For example, if you wish to recalculate the same problem with a 5-year compounding period, simply carry out the following steps: , EXE (set n=5) ( FV is highlighted) 7. SOLVE (FV= ) 1

16 Section 3.3 Computing n Or i 4th paragraph page , ( I% is highlighted) , EXE (set I%=7.5) , EXE (set PV=1500) 5. ( FV is highlighted) , EXE (set FV= 1200) 7.,,,, ( n is highlighted) 8. SOLVE (n= ) 7th paragraph page ( n is highlighted) 3. 5, EXE (set n=5) 4. ( PV is highlighted) , EXE (set PV= 6000) 6. ( FV is highlighted) , EXE (set FV=10000) 8.,,, ( I% is highlighted) 9. SOLVE (I%= ) Section 4.3 Computing PVSS With A Financial Calculator 2nd paragraph page ( n is highlighted) 3. 6, EXE (set n=6) 4., ( FV is highlighted) , EXE (set FV= 1000) 6.,, ( PV is highlighted) 7. SOLVE (PV= ) Section 4.5 Computing n Or i 3rd paragraph page ( n is highlighted) 3. 2, EXE (set n=2) 4. ( PV is highlighted) , EXE (set PV= 4750) 6. ( FV is highlighted) , EXE (set FV= 5000) 8.,,, ( I% is highlighted) 9. SOLVE (I%= ) 2

17 1st paragraph page , ( I% is highlighted) 3. 8, EXE (set I%=8) , EXE (set PV=-4750) 5. ( FV is highlighted) , EXE (set FV=5000) 7.,,,, ( n is highlighted) 8. SOLVE (n= ) Section 5.4 Using A Financial Calculator To Compute FVA And FVAD Paragraph 2 page EXE, 1 (set to Begin mode) , EXE (set n=5) 9. 8, EXE (set I%=8) 5. ( PMT is highlighted) , (set PMT=-5000) 7. ( FV is highlighted) 8. SOLVE (FV= ) 2. EXE, 2 (set to End mode) , EXE (set n=5) 5. 8, EXE (set I%=8) 6. ( PMT is highlighted) , (set PMT=-5000) 8. ( FV is highlighted) 9. SOLVE (FV= ) Section 5.6 Solving Sinking Fund Problems Paragraph 3 page EXE, 1 (set to Begin mode) 3. ( n is highlighted) 4. 3, EXE (set n=3) 5. 9, EXE (set I%=9) 6., ( FV is highlighted) , EXE (set FV= ) 8., ( PMT is highlighted) 9. SOLVE (PMT= ) 3

18 Paragraph 5 page EXE, 2 (set to End mode) 3., ( I% is highlighted) 4. 10, EXE (set I%=10) 5. ( PMT is highlighted) , EXE (set PMT=-1200) , EXE (set FV=10000) 8.,,,, ( n is highlighted) 9. SOLVE (n= ) Paragraph 6 page EXE, 2 (set to End mode) 3. ( n is highlighted) 4. 5, EXE (set n=5) 5., ( PMT is highlighted) , EXE (set PMT=-1200) , EXE (set FV=10000) 8.,,, ( I% is highlighted) 9. SOLVE (I%= ) 6.4 Using A Financial Calculator To Compute PVA And PVAD 3rd paragraph page EXE, 2 (set to End mode) 3. ( n is highlighted) 4. 6, EXE (set n=6) 5. 7, EXE (set I%=7) 6. ( PMT is highlighted) , EXE (set PMT=-1500) 8., ( PV is highlighted) 9. SOLVE (PV= ) 1st paragraph page EXE, 1 (set to Begin mode) 3. ( n is highlighted) 4. 6, EXE (set n=6) 5. 7, EXE (set I%=7) 6. ( PMT is highlighted) , EXE (set PMT=-1500) 8., ( PV is highlighted) 9. SOLVE (PV= ) 4

19 6.6.2 Using A Financial Calculator 6th paragraph page EXE, 2 (set to End mode) 3. ( n is highlighted) 4. 11, EXE (set n=11) 5. 8, EXE (set I%=8) , EXE (set PV= ) 7. ( PMT is highlighted) 8. SOLVE (PMT= ) 2nd paragraph page EXE, 2 (set to End mode) 3., ( I% is highlighted) , EXE (set I%=10.5) , EXE (set PV= ) , EXE (set PMT=55000) 7.,,, ( n is highlighted) 8. SOLVE (n= ) 3rd paragraph page EXE, 2 (set to End mode) 3. ( n is highlighted) 4. 4, EXE (set n=4) 5. ( PV is highlighted) , EXE (set PV= ) , EXE (set PMT=55000) 8.,, ( I% is highlighted) 9. SOLVE (I%= ) Section Creating An Amortization Schedule Paragraph 5 page AMORT 2. EXE, 2 (set to End mode) 3. ( PM1 is highlighted) 4. 1, EXE (set PM1=1) 5. 1, EXE (set PM2=1) 6. 4, EXE (set n=4) 7. 11, EXE (set I%=11) , EXE (set PV=1000) , EXE (set PMT= ) 10.,, ( BAL:Solve is highlighted) 11. EXE (or SOLVE) (BAL=787.67) 12. ESC 13. ( INT:Solve is highlighted) 14. EXE (or SOLVE) (INT=-110) 15. ESC 16. ( PRN:Solve is highlighted) 17. EXE (or SOLVE) (PRN= ) 18. AMORT 19. ( PM1 is highlighted) 5

20 20. 2, EXE (set PM1=2) 21. 2, EXE (set PM2=2) 22.,,,,,, ( BAL:Solve is highlighted) 23. EXE (or SOLVE) (BAL= ) 24. ESC 25. ( INT:Solve is highlighted) 26. EXE (or SOLVE) (INT= ) 27. ESC 28. ( PRN:Solve is highlighted) 29. EXE (or SOLVE) (PRN= ) 30. AMORT 31. ( PM1 is highlighted) 32. 3, EXE (set PM1=3) 33. 3, EXE (set PM2=3) 34.,,,,,, ( BAL:Solve is highlighted) 35. EXE (or SOLVE) (BAL= ) 36. ESC 37. ( INT:Solve is highlighted) 38. EXE (or SOLVE) (INT= ) 39. ESC 40. ( PRN:Solve is highlighted) 41. EXE (or SOLVE) (PRN= ) 42. AMORT 43. ( PM1 is highlighted) 44. 4, EXE (set PM1=4) 45. 4, EXE (set PM2=4) 46.,,,,,, ( BAL:Solve is highlighted) 47. EXE (or SOLVE) (BAL= ) 48. ESC 49. ( INT:Solve is highlighted) 50. EXE (or SOLVE) (INT= ) 51. ESC 52. ( PRN:Solve is highlighted) 53. EXE (or SOLVE) (PRN= ) Section 7 Cash Flow Structures Involving Single Sums And Annuities Paragraph 5 page EXE, 2 (set to End mode) , EXE (set n=3) 5. 7, EXE (set I%=7) , EXE (set PV=-1000) , (set PMT=-300) 8. ( FV is highlighted) 9. SOLVE (FV= ) 2. EXE, 2 (set to End mode) , EXE (set n=3) 5. 7, EXE (set I%=7) 6. ( PMT is highlighted) , (set PMT=-300) , (set FV=2500) 9.,, ( PV is highlighted) 10. SOLVE (PV= ) 6

21 Paragraph 6 page EXE, 2 (set to End mode) 3. ( n is highlighted) 4. 6, EXE (set n=6) 5.,( PV is highlighted) (set PV=-920) 7. 80, EXE (set PMT=80) , EXE (set FV=1000) 9.,,, ( I% is highlighted) 10. SOLVE (I%= ) 7

22 Appendix 5B KEYSTROKES FOR SOLVING SELECTED TVM PROBLEMS USING CASIO 100V CALCULATOR The individual keystrokes in this appendix are separated by commas: 1. Preliminary housekeeping and miscellaneous chores: a. Clearing memory SHIFT, 9,, (ALL), EXE, EXE, AC b. Set the number of decimal places to be displayed SET UP,,... (Fix:Off), EXE, (enter 0 ~ 9), ON 2. Future value of a single sum problems a. Finding FVSS CMPD,, number of periods, EXE, interest rate, EXE, -, amount of present value,, (FV), SOLVE CMPD,,, interest rate, EXE, -, amount of present value, EXE,, amount of future value, EXE,,... (n), SOLVE c. Finding i CMPD,, number of periods, EXE,, -, amount of present value, EXE,, amount of future value, EXE,,... (I%), SOLVE 3. Present value of a single sum problems a. Finding PVSS CMPD,, number of periods, EXE, interest rate, EXE,,, amount of future value, EXE,, (PV), SOLVE see 2b above c. Finding i% see 2c above 4. Future value of annuity problems a. Finding FVA CMPD, EXE, 2 (set to End mode),, number of payments, EXE, interest rate, EXE,, -, amount of one payment, EXE, (FV) SOLVE CMPD, EXE, 2 (set to End mode),,, interest rate, EXE,,, amount of one payment, EXE, future value of the annuity, EXE,,... (n), SOLVE c. Finding i CMPD, EXE, 2 (set to End mode),, number of payments, EXE,, -, amount of one payment, EXE, future value of the annuity, EXE,,...(I%), SOLVE 8

23 5. Future value of annuity due problems a. Finding FVAD CMPD, EXE, 1 (set to Begin mode),, number of payments, EXE, interest rate, EXE,, -, amount of one payment, EXE, (FV) SOLVE CMPD, EXE, 1 (set to Begin mode),,, interest rate, EXE,,, amount of one payment, EXE, future value of the annuity, EXE,,... (n), SOLVE c. Finding i% CMPD, EXE, 1 (set to Begin mode),, number of payments, EXE,, -, amount of one payment, EXE, future value of the annuity, EXE,,...(I%), SOLVE 6. Sinking Fund Problems a. Finding sinking fund payment CMPD, set calculator to beginning or end-of-period payments according to what is stated in the question,, number of periods, EXE, interest rate, EXE,,, (FV) target amount of sinking fund, EXE,, (PMT), SOLVE CMPD, set calculator to beginning or end-of-period payments according to what is stated in the question,,, interest rate, EXE,,, amount of one payment, EXE, (FV) target amount of sinking fund, EXE,,... (n), SOLVE c. Finding i% CMPD, set calculator to beginning or end-of-period payments according to what is stated in the question,, number of payments, EXE,, -, amount of one payment, EXE, (FV) target amount of sinking fund, EXE,,...(I%), SOLVE 7. Present Value Of An Annuity Problem a. Finding PVA CMPD, EXE, 2 (set to End mode),, number of payments, EXE, interest rate, EXE,, -, amount of one payment, EXE,, (PV) SOLVE CMPD, EXE, 2 (set to End mode),,, interest rate, EXE, present value of the annuity, EXE,, amount of one payment, EXE,,... (n), SOLVE c. Finding i% CMPD, EXE, 2 (set to End mode),, number of payments, EXE,, present value of the annuity, EXE, -, amount of one payment, EXE,,...(I%), SOLVE 9

24 8. Present Value Of An Annuity Due Problem a. Finding PVAD CMPD, EXE, 1 (set to Begin mode),, number of payments, EXE, interest rate, EXE,, -, amount of one payment, EXE,, (PV) SOLVE CMPD, EXE, 1 (set to Begin mode),,, interest rate, EXE, present value of the annuity, EXE,, amount of one payment, EXE,,... (n), SOLVE c. Finding i% CMPD, EXE, 1 (set to Begin mode),, number of payments, EXE,, present value of the annuity, EXE, -, amount of one payment, EXE,,...(I%), SOLVE 9. Debt Service/Capital Sum Liquidation Problems a. Finding the payment CMPD, set calculator to beginning or end-of-period payments according to what is stated in the question,, number of periods, EXE, interest rate, EXE, (PV) -, beginning amount of loan or capital sum, EXE, (PMT) SOLVE CMPD, set calculator to beginning or end-of-period payments according to what is stated in the question,,, interest rate, EXE, (PV) -, beginning amount of loan or capital sum, EXE,,... (n), SOLVE c. Finding i% CMPD, set calculator to beginning or end-of-period payments according to what is stated in the question,, number of payments, EXE,, (PV) -, beginning amount of loan or capital sum, EXE,,...(I%), SOLVE d. Creating an amortization schedule CMPD, EXE, 2 (set to End mode),, number of payments, EXE, interest rate, EXE, mortgage amount, EXE, (PMT) SOLVE, AMORT,, 1 (for period 1), EXE, 1, EXE (for period 1),,... (BAL:Solve), EXE (or SOLVE), ESC,, (INT:Solve) EXE (or SOLVE), ESC,, (PRN:Solve) EXE (or SOLVE), repeat for periods 2, 3... etc. 10. Present Value Of Uneven Cash Flows Problems (Note: Each cash flow should be entered as a positive or negative amount, depending on whether it is an inflow or outflow) a. Cash flows at end of period: ungrouped data CASH, interest rate, EXE, EXE, amount of cash flow at period 0, EXE, amount of cash flow at period 1, EXE, amount of cash flow at period 2, EXE...etc, ESC,, (NPV:Solve) EXE (or SOLVE) b. Cash flows at end of period: grouped data Same steps as 10a c. Cash flows at beginning of period: ungrouped data Same steps as 10a d. Cash flows at beginning of period: grouped data Same steps as 10a 11. Future value of uneven cash flows problems a. Generally Compute present value as in 10(a) (d) above, then CMPD,, number of payments, EXE, interest rate, EXE, -, amount of present value, EXE,, (FV) SOLVE 10

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