Finance
Calculator
HP 12C
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?
Note:
All the Time Value of Money keys are on the left side first row of the calculator.
Always press the number first before pressing the Time Value of Money Keys.
Clear time value of money memory: f (the yellow key) FIN
(third row fourth column, next to the ENTER bar)
Clear previous data: CLX (third row fifth column, next to the ENTER bar)
Enter number of years: N = 5 (press 5 and then N)
Enter interest rate: i (I/YR) = 10 (press 10 and then
I/Y)
Enter amount of investment: PV = -500 (press 500, CHS to change sign, and
then PV)
Not using payment key: PMT = 0 (press 0 and then PMT)
Calculate unknown: Press FV, answer is $805.
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.
Clear time value of money memory: f (the yellow key) FIN
(third row fourth column, next to the ENTER bar)
Clear previous data: CLX (third row fifth column, next to the ENTER bar)
Enter number of years: N = 5
Enter interest rate: i = 10
Enter Future Value: FV = 805.26
Not using payment key: PMT = 0
Calculate unknown: Press PV, answer is 500+/-
c. Unkown: N. How long must $500 remain invested, earning a 10 percent
annual return, to grow to $805.26?
Clear time value of money memory: f (the yellow key) FIN
(third row fourth column, next to the ENTER bar)
Clear previous data: CLX (third row fifth column, next to the ENTER bar)
Enter interest rate: i = 10
Enter Present Value: PV = -500
Enter Future Value: FV = 805.26
Not using payment key: PMT = 0
Calculate unknown: Press N, answer is 5.
d. Unkown: i (I/Y). What annual percentage rate must $500 earn to grow to
805.26 at the end of 5 years.
Clear time value of money memory: f (the yellow key) FIN
(third row fourth column, next to the ENTER bar)
Clear previous data: CLX (third row fifth column, next to the ENTER bar)
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: Press i (I/YR), answer is 10 percent.
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Last Updated on 1 May 2002, e-mail any comments to: robert.balik@wmich.edu |