I would like step by step instructions on how to solve a simple TVM equation. i.e. I invest a lump sume of $2400 in an investment that returns 6% annually. How much will the investment be worth after ...
GOOD QUESTION, Patweetyp...
I've got you covered.
Seeing how it's been three weeks since you posted this there's a chance you've already gotten your answer, but let me go ahead solve this for those out there who may have had the same problem.
Background: There are FIVE TVM Keys; and as you would assume, you MUST input FOUR of them in order for the BA II Plus to solve for the fifth. Now let's get down to business.
1. Hit CLR TVM. [This is just a cleanup maneuver]
1a. Hit ENTER [yes, BA II Plus always needs to be told to store the value, ALWAYS]
2. Type in -2400
3. Hit PV [Since you are investing money at time 0, your present value is negative 2400]
3a. Hit ENTER
4. Type 6
5. Hit I/Y [Your annually compounded interest rate is 6 percent]
5a. Hit ENTER
6. Type 0
7. Hit PMT [you do not have any recurring deposits*]
7a. Hit ENTER
8. Type 1
9. Hit N [there is one year until expiration/liquidation/termination]
9a. Hit ENTER
10. Hit CPT
11. Hit FV [this is your ANSWER = 2544]
----- From here, all you would need to do is change N in order to get your other answers (5 years, 10 years, etc) ----
*If your calculation does not require a recurring payment then you really just have a basic equation of value which would be solved faster by hand. (IE, 2400*(1.06)^1=FV=2544).
You'll notice that I underlined "annually compounded" as well as "one year". The reason for this is because you ALWAYS need your interest term to match your time interval. For instance, if you had monthly payments of which you wanted the year-end total you would need a monthly effective interest rate, and N would be 12.
Okay, I hope that helped. The BAII Plus is the best calculator for time-value-money calculations I've come across. When things get more advanced, you will start using the amortization table which cannot be found in any other TI Calculator (from what I know). TVM is perfect for annuities, mortgages, loans, bonds, and more.
email@example.com for more questions.
TEXAS INSTRUMENTS = 1-800-TI-CARES...they are friendly.
Feb 19, 2011 |
Texas Instruments BA-II Plus Calculator