Finance
Calculator
Texas Instruments 83 Plus Silver Edition
Annuities. Time Value of Money Problems using multiple
payments of equal value
a. Future Value of a Regular Annuity
What is the Future Value of 10 equal end of period payments of $100 each,
invested at an annual interest rate of 10 percent
Compounding should remain at P/Y = 1, C/Y = 1.
Enter number of years: N = 10
Enter interest rate: i = 10 (press 10 and then I/Y)
Enter payment: PMT = -100 ((-) can be found next to then ENTER key)
Not using Present Value key: PV = 0
Calculate unknown: ALPHA (the green key), SOLVE (above the ENTER key) FV,
answer is $1,593.742
b. Unkown: Number of years.
$1,593.74 is needed sometime in the future. How long, investing $100 per year, earning
10 percent annually, would it take to amass this amount of money?
Compounding should remain at P/Y = 1 and C/Y = 1
Enter interest rate: i = 10
Enter payment: PMT = 100
Enter Future Value: FV = -1593.74
Not using Present Value key: PV = 0
Calculate unknown: ALPHA, SOLVE, N, answer is 9.999
(round to 10)
c. Unkown: Interest rate needed
Once again, $1,593.74 is needed, and you know ahead of time that you have
10 years to obtain it. What annual interest rate would a $100 annuity have to earn for you
to achieve this goal?
Compounding should remain at P/Y = 1 and C/Y = 1
Enter payment: PMT = 100
Enter Future Value: FV = -1593.74
Enter Present Value: PV = 0
Enter number of years: N = 10
Calculate unknown: ALPHA, SOLVE, i%, answer is 9.999
(round to 10)
d. Unknown: Payment.
To obtain an amount of $2000.00 ten years from now, earning 10 percent annually, what
amount would have to be invested on a yearly basis?
Compounding should remain at P/Y = 1 and C/Y = 1
Enter Future Value: FV = -2000.00
Enter Present Value: PV = 0
Enter number of years: N = 10
Enter interest rate: i = 10
Calculate unknown: ALPHA, SOLVE, PMT, answer is $125.49
e. Present Value of a Regular Annuity
What is the present value of a 4 year annuity, with payments of $100
earning 10 percent annually?
Compounding should remain at P/Y = 1 and C/Y = 1
Enter number of years: N = 4
Enter Interest Rate: i = 10
Enter Payments: PMT = $-100
Enter Future Value: FV = 0
Calculate unknown: ALPHA, SOLVE, PV,
answer is $316.99
*** The previous problems all deal
with a regular annuities. The next set deals with an annuity due. The difference being
that with an annuity due, payments are made at the beginning of the compounding periods.
Annuities Due: Time Value of Money Problems using
equal beginning of period payments.
To change the setting on the calculator from regular to annuity due:
Go to APPS, ENTER, 1:FINANCE choose 1:TVM Solver, ENTER (last row and the very right
column). Scroll down to change the PMT from E: Pmt_End to F: Pmt_Begin
a. Unknown: FV or Future Value.
What is the Future Value of ten equal beginning of period payments of $100 each,
invested at an annual interest rate of 10 percent.
Compounding should remain at P/Y = 1, C/Y = 1.
Enter number of years: N = 10
Enter interest rate: i = 10
Enter amount of payments: PMT = -100 ((-), which can be found next to the
ENTER key.)
Enter Present Value: PV = 0
Calculate unknown: ALPHA, SOLVE, FV, answer is $1,753.12
b. Unknown: Number of years
$1,753.12 is needed sometime in the future. How long, investing $100 per
year, earning 10 percent annually, would it take to amass this amount of money?
Compounding should remain at P/Y = 1 and C/Y = 1
Enter interest rate: i = 10
Enter payment: PMT = 100
Enter Future Value: FV = -1753.12
Not using Present Value key: PV = 0
Calculate unknown: ALPHA, SOLVE, N, answer is 10
c. Unkown: Interest rate needed
This time $1,500 is needed, and you know in advance that you have 10 years
to obtain it. What annual interest rate would a $100 annuity due have to earn for you to
achieve this goal?
Compounding should remain at P/Y = 1 and C/Y = 1
Enter payment: PMT = 100
Enter Future Value: FV = -1500.00
Enter Present Value: PV = 0
Enter number of years: N = 10
Calculate unknown: ALPHA, SOLVE, i%, answer is 7.26 percent
d. Unknown: Payment
To obtain an amount of $3000.00 ten years from now, earning 10 percent
annually, what amount would have to be invested on a yearly basis in an annuity due form?
Compounding should remain at P/Y = 1 and C/Y = 1
Enter Future Value: FV = -3000.00
Enter Present Value: PV = 0
Enter number of years: N = 10
Enter interest rate: i = 10
Calculate unknown: ALPHA, SOLVE, PMT, answer is $171.12
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Last Updated on 1 May 2002, e-mail any comments to: robert.balik@wmich.edu |