# Saving Money for Finance Students by Utilizing the TVM Capabilities of Graphing Calculators

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2 capabilities, this means that only 26% of the Henderson State Finance students would need to buy a new calculator. The percentage would only be 21% if the non-texas Instruments calculators also have the TVM capability. This preliminary survey did not answer the question of whether the results for Business Finance students at Henderson State University could be generalized to a wider student population. The Two Larger Surveys Two different surveys were conducted. In the first, AACSB accredited schools were surveyed to determine the likelihood that a College Algebra type course would be a prerequisite for Business Finance. The second survey asked 2,256 Mathematics Chairs questions about the requirement that students purchase graphing calculators in College Algebra. The first survey, of AACSB accredited schools, examined 60 online college catalogs chosen on a randomized basis. The results are as follows: 1. Of the schools in the sample, sixteen (26.7%) required College Algebra. A 95% confidence interval for the population of AACSB schools would have a lower bound of 15.5% and an upper bound of 37.9%. 2. Twenty (33.3%) of the schools in the sample required some algebra, including College Algebra and all other course titles containing the word Algebra. A 95% confidence interval for the entire population of AACSB schools would have a lower bound of 21.4%, and an upper bound of 45.3%. 3. A majority of the schools require at least some math as a prerequisite to Business Finance. There were 36 schools in this category, comprising 60% of the schools in the sample. A 95% confidence interval for the entire population of AACSB schools would have a lower bound of 47.5%, and an upper bound of 72.4%. A group of AACSB professors who attended the Annual Meeting of the Academy of Economics and Finance expressed dismay at the results of this survey when this paper was presented in February A survey of the professors attending the presentation showed 100% of those professors came from AACSB schools that required College Algebra as a prerequisite for Business Finance. To explain the discrepancy between the results of our study and the impromptu survey at the presentation, the authors suggested that perhaps the sample of schools represented in the presentation at the conference was not random. Perhaps, we surmised, schools that are lax in their mathematical prerequisites are also less likely to send faculty to conferences. The authors assured the conference attendees that survey of AACSB schools presented in this paper was indeed a random sample. The second survey, of math department chairs, was conducted using an survey. Of these, we received a total of 979 responses. Some of the conclusions from the survey were: 1. The fraction of departments that either require or recommend a graphing calculator for college algebra is 61.5% +/- 3.3% (5% margin of error). 2. When a math department recommends or requires a graphing calculator, Texas Instruments are the choice of the majority, or 91.9% +/- 2.4% (5% margin of error). 33

4 >Nom( and >Eff( find the nominal rate, given the effective rate and the number of compound periods or find the effective rate, given the nominal rate and number of compound periods. See Exhibit 6 for a screen view of these commands. The calculator comes with a manual that discusses these commands in detail. The 83 and 83+ not only has the features of the financial calculators, it also does more than the financial calculators. It has the ability to graph results, an example of which follows in the next section. A graphing example with the TI-83 Using the above example of a \$100,000 loan, we will show how to graph the outstanding balance. Under the MODE key, use the arrow keys and enter to set the number of decimal places to 2 and select parametric (Par) for the graphing mode. See Exhibit 7. We could graph the balance using the using function mode (Func), but parametric (Par) allows us to trace and see the balance for each month or year. 1. Press the Y= key. 2. Return to the Finance/Calc menu. The bal( command, which is item 9 under the Finance/CALC menu is put into Y1 by pressing enter. T is the payment number. See Exhibit 8 for a picture of the parametric function list. 3. Set the WINDOW variables to run from the 0th to the 360th payment and plot the balance every 12 months. (Setting the Tstep to 1 would allow you to see the balance for each month, but it would take a long time to graph.) See Exhibit 9 for a list of all the WINDOW variables values. Tracing will show the month and the corresponding balance. In the example shown in Exhibit 10, tracing to T=180, shows that the outstanding balance is \$74, This illustrates that only about one quarter of the loan is paid off after half the payments are made. Creating Tables with the TI-83: The TI-83 also makes tables easily. For example, you could put the payment allocated to the principal in an X variable and the interest allocation in a Y variable. The first graphing pair was deselected by moving the cursor over an = and pressing ENTER. See Exhibit 11 showing the first parametric function pair deselected and the change to the 2nd function pair. Set the TBLSET menu as shown in Exhibit 12 and then select TABLE. The Table in Exhibit 13 shows that about equal amounts are applied to the principal and interest during the 242nd payment. Finance Features on Other TI Graphing Calculators The finance features for the TI-83, TI-83+, and TI-83+ Silver Edition graphing calculators are built in. The other TI calculators can be re-programmed quite easily by going to the following locations on the web: For the TI-82, a BASIC program called TVMSLVR can be downloaded from 35

6 Exhibit 6 Exhibit 7 Exhibit 8 Exhibit 9 Exhibit 10 Exhibit 11 Exhibit 12 Exhibit 13 Biographies: Dr. Glenna Sumner is a member of the school of business. She received her Ph.D. in Economics from the University of Oklahoma in Michael Lloyd received his B.S in Chemical Engineering in 1984 and his Ph.D. in Mathematics from Kansas State University in Manhattan. He has presented papers at meetings of the Academy of Economics and Finance, the American Mathematical Society, the Arkansas Conference on Teaching, the Mathematical Association of America, and the Southwest Arkansas Council of Teachers. He has been at Henderson State University since August Ying Chen received her BBA from Henderson State University in She Received her MBA from Henderson State University in

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