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Time Value of Money28
Figure 1 illustrates a cash flow diagram and how the data in the diagram corresponds to the
TVM keys. For a complete list of keys used for TVM problems, along with their descriptions,
see Table 3-1.
To save values for the TVM variables, enter the desired number, followed by the
corresponding TVM key. To calculate an unknown value, enter all known values and press the
key of the item you want solved.
Calculating Payments on a Loan
You borrow 140,000.00 for 30 years (360 months) at 6.5% annual interest, compounded
monthly. What is your monthly payment to the lender? Note: the following example is
calculated with RPN set as the operating mode.
At the end of the 30 years, you expect to have a zero balance (FV=0). The example is
calculated with RPN set as the operating mode
Table 3-1 TVM Keys
Keys Description
N
Stores or calculates the number of payments or compounding periods.
:^
Multiplies a value by the number of payments per year and stores as N.
Y
Stores or calculates the nominal, annual interest rate.
V
Stores or calculates the present value (PV). To a lender or borrower, PV is the amount of a
loan; to an investor, PV is the initial investment. PV always occurs at the beginning of the first
period.
M
Stores or calculates the amount of each periodic payment.
:[
Stores the number of payments or compounding periods per year. This value is 12 by default,
but it maintains its current entered value when TVM Reset is used.
F
Stores or calculates the future value (FV), a final cash flow. FV always occurs at the end of the
last compounding period.
:?
Sets Begin mode (BEG). Payments occur at the beginning of each compounding period.
:]
Sets End mode (END). Payments occur at the end of each compounding period.