Chapter 2 Summary

Calculator

• Time Value of Money Functions

  • The time value of money buttons are the five buttons located on the third row of your calculator.
    

    Calculator Symbol	Characteristic	Data Entry Requirements
    [latex]N[/latex]	The number of payment periods	An integer or decimal number; no negatives
    [latex]I/Y[/latex]	The nominal interest rate per year	Percent format without the [latex]\%[/latex] sign (i.e., [latex]7\%[/latex] is just [latex]7[/latex])
    [latex]PV[/latex]	Present value or principal	An integer or decimal number
    [latex]PMT[/latex]	Annuity payment amounts	An integer or decimal number
    [latex]FV[/latex]	Future value or maturity value	An integer or decimal number

    To enter any information into any one of these buttons or variables, called loading the calculator, key in the information first and then press the appropriate button.

  • The frequency function is logically placed above the [latex]I/Y[/latex] button and is labeled [latex]P/Y[/latex]. This function addresses payment frequencies and compound interest frequencies. Access the function by pressing 2nd [latex]P/Y[/latex] to find the following entry fields, through which you can scroll using your arrow buttons.
    

    Calculator Symbol	Characteristic	Data Entry Requirements
    [latex]P/Y[/latex]	Annuity payments per year (payment frequency)	A positive, nonzero number only
    [latex]C/Y[/latex]	Compounds per year (compounding frequency)	A positive, nonzero number only

    To enter any information into one of these fields, scroll to the field on your screen, key in the data, and press ENTER. When you enter a value into the [latex]P/Y[/latex] field, the calculator will automatically copy the value into the [latex]C/Y[/latex] field for you. If in fact the [latex]C/Y[/latex] is different, you can change the number manually. To exit the [latex]P/Y[/latex] window, press 2nd QUIT.

  • To keying in a question, you must load the calculator with six of the seven variables. To solve for the missing variable, press CPT followed by the variable.
  • The cash flow sign convention is used for the [latex]PV[/latex], [latex]PMT[/latex], and [latex]FV[/latex] buttons. If money leaves you, you must enter it as a negative. If money comes at you, you must enter it as a positive.

• Payment Setting

  • The calculator default is for END mode, which is the ordinary annuity.
  • The annuity type (payment timing) setting can be found on the second shelf above the [latex]PMT[/latex] key. This function works as a toggle.
  • To toggle the setting, complete the following sequence:
    1. Press 2nd BGN (the payment button).
    2. Press 2nd SET (the ENTER button) to switch payment settings.
    3. Press 2nd QUIT (the CPT button) to exit the payment setting menu.
  • When the calculator is in annuity due mode, a tiny BGN is displayed in the upper right of your calculator.

  

_{Ordinary Annuity Calculations (PV, PMT, FV) by Joshua Emmanuel [4:31] Transcript available.}

_{Annuity Due Calculations Using the BAII Plus by Joshua Emmanuel [2:51] Transcript Available.}

_{Annuity Due Calculations Using BAII Plus-Part 2 by Joshua Emmanuel [2:05] Transcript Available.}

Attribution

“Chapter 2 Summary” from Financial Math – Math 1175 by Margaret Dancy is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.