Question about Texas Instruments TI-84 Plus Calculator

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Tvm_I% I am trying to find the interest rate given the present value, future value and years. The manual says [(N,PV,PMT,FV,P/Y,C/Y)] What does P/Y and C/Y mean. I do not know what data to input.

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  • Anonymous Nov 10, 2008

    p/y is payments per year and c/y is compounding periods in the year. If you are NOT making monthly payments [where p/y would be 12] to an account or loan then p/y and c/y are the same. So, go by the compounding in the question --- Monthly [12], semi-monthly [24], bi-weekly [26], etc...

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I'm going to make up an example so this is easier to answer.

Ex: You have a bond with a price of $987, with a coupon of 1.5%, which matures in 10 years.
To do this problem:

[APPS] [1] [1]

What comes up on screen:

N=
I%=
PV=
PMT=
FV=
This is all the stuff that you really care about.

Now, add in the info you know from the equation. Put in a 0 if you don't know the number for that part.

This is what it should look like:
N=10
I%=0
PV=-987
PMT=15
FV=1000

Now, cursor back up to the I%=0 part.
Highlight the '0' that you had in there from before.
[ALPHA] [ENTER] ----> notice above the enter button it says in green lettering "solve", this is what you are trying to do.

Yay! Your caluculator has now figured out the interest rate!
it should say:
I%=1.642027191



Notes:
1. Make sure your payment is set at the end of the period (this is just the standard so you probably don't want to mess with it.) Scroll down to the PMT: END BEGIN part and make sure the END is highlighted.

2. This example used annual coupon payments. The p/y and c/y business is used for when you have semi-annual payments or semi-annual compounding (or daily, or hourly etc). You can use this feature, or you can just adjust the payment and periods
(ie: if this were a semi-annual coupon bond, the N would be 20 and the pmt would be 7.5)

Posted on Apr 30, 2009

  • lemondrop110 Apr 30, 2009

    oh yeah I also forgot to mention

    Note 3.
    Make sure you have a sign change between the PV and FV (notice how in my example the PV is a negative number because you have to pay out that much money to buy the bond).


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My TI BA II Plus is returning incorrect answers for TVM problems... Is this common and can it be fixed?


Let's see, 10% interest per year on $100 for one month. That's 10/12 of a percent interest on $100 is $0.83, added to $100 is $100.83 (with a bunch more 3s at the end). Clearly this is the correct answer.

What answer are you expecting? The future value at the end of one year instead of one month?

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Error 5 indicates that no solution exists. In this particular case, you're asking for the interest rate on a savings account that pays you 10,000 now and an additional 20,000 10 years later. (Or a loan where you pay 10,000 now and an additional 20,000 10 years later.)

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Neely Neel Neel Neelerson,

--> APPS
--> TVM

Viola. The initials TVM stand for Time-Value-Money; it's a widely used tool throughout financial mathematics. If you are looking to deal with annuities, bonds, present value equations, future value equations, or even certain stocks then you will want to use the TVM app within your TI-84.

When you go into that menu screen you will see about 10 input lines; and despite how you're being taught you'd be best off using only five (from a mathematical & conceptual standpoint). The backbone of the TVM is the time-zero equation of value. So, all you want to be touching is the N, I/Y, PV, PMT, and FV keys.

Background on TVM:
N = Number of intervals
I/Y = Effective Interest Rate Per Interval (5% is .05 but the computer wants it entered as 5.0)
PV = The Present Value
PMT = Recurring Payment (either deposit or withdrawal)
FV = Future Value

There are like 3 other inputs that I encourage you to ignore (in exchange for learning exactly what's going on within this application).

NOTE: You MUST make your effective interest term match your number of intervals. For example, an annuity with monthly payments for 5 years with a monthly effective interest rate of 2% would need an N value of 60 (which is 12 months per year times 5 years for a total of 60 months).

There's more that could be said, but I think this should help you find the PV of an annuity.

Go Bulls,



The Math Cheetah
411@themathcheetah.com

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CPT FV (compute future value, see 2544.00, the value after one year)

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CPT FV (see 3211.74, the value after five years)

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1 5 0 0 0 _/- PV (present value, negative because you're paying it out)
6 I/Y (annual interest rate)
25 2nd [*P/Y] N (25 years)
CPT FV (compute future value, see 66,974.55)

If the interest is compounded annually:

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1 5 0 0 0 _/- PV (present value, negative because you're paying it out)
6 I/Y (annual interest rate)
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Invalid computation


Hmmm, I don't think the problem is with your calculator. I'd be checking the accounting question again as I don't think you've got your annuity question structured right.

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You'd have to make annual payments of $11,878.93 (4 of them) at that annual interest rate to get to a future value of $50,069 (which has a present value of $43,632.24).

Are you sure that the FV isn't the trade in value at the end of the 4 years?

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