Finance
Calculator
Texas Instruments 83 Plus
Single Payment Time Value of Money Problems:
a. FV or Future Value Problem: If $500 investment earned an
annual interest rate of 10 percent with annual compounding what would its' value be in
five years.
To start calculating, use financial functions by pressing APPS (third row second column),
ENTER, 1:FINANCE
For Time Value of Money, choose 1:TVM Solver, ENTER (last row and the very right column)
Proper compounding: Scroll down to P/Y and press: P/Y = 1,
C/Y = 1.
Enter number of years: N = 5
Enter interest rate: i = 10
Enter amount of investment: PV = -500 ((-) can be found next to the ENTER
key)
Not using payment key: PMT = 0
Calculate unknown: ALPHA (the green key), SOLVE (above the ENTER key) FV,
answer is $805.26
b. PV or Present Value Problem: What amount would have to be
invested for five years, earning an annual interest rate of 10 percent, to have $805.26?
In other words, what is the present value of 805.26 discounted back five years at an
annual rate of 10 percent.
Compounding should remain at P/Y = 1 and C/Y = 1
Enter number of years: N = 5
Enter interest rate: i = 10 (press 10 and then I/Y)
Enter Future Value: FV = 805.26
Not using payment key: PMT = 0
Calculate unknown: ALPHA, SOLVE, PV, answer is -500
c. Unkown: N. How long must $500 remain invested, earning a 10 percent
annual return, to grow to $805.26?
Compounding should remain at P/Y = 1 and C/Y = 1
Enter interest rate: i = 10
Enter Present Value: PV = -500
Enter Future Value: FV = 805.26
Not using payment key: PMT = 0
Calculate unknown: ALPHA, SOLVE, N , answer is 5.
d. Unkown: i. What annual percentage rate must $500 earn to
grow to 805.26 at the end of 5 years.
Compounding should remain at P/Y = 1 and C/Y = 1
Enter Present Value: PV = -500
Enter Future Value: FV = 805.26
Enter number of years: N = 5
Not using payment key: PMT = 0
Calculate unknown: ALPHA, SOLVE, I%, answer is 10 percent
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Last Updated on 1 May 2002, e-mail any comments to: robert.balik@wmich.edu |